Filed Pursuant to Rule 424(b)(3) Registration Statement No. 333-206640 PROSPECTUS SUPPLEMENT NO. 2 (to Prospectus dated December 14, 2018) 5,000,000 Shares of Beneficial Interest SPDR ® LONG DOLLAR GOLD TRUST, A SERIES OF WORLD GOLD TRUST This Prospectus Supplement No. 2 (“Supplement No. 2”) supplements and amends our Prospectus dated December 14, 2018 (the “Prospectus”). This Prospectus Supplement should be read together with the Prospectus and the Prospectus Supplement dated March 4, 2019. On July 15, 2019, WGC USA Asset Management Company, LLC (the “Sponsor”), the commodity pool operator of the SPDR ® Long Dollar Gold Trust (“GLDW”), notified the NYSE Arca stock exchange that the Sponsor has determined to voluntarily close GLDW, delist, and liquidate GLDW’s shares (“Shares”) from trading on the NYSE Arca and to withdraw the Shares from registration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). GLDW will no longer accept creation and redemption orders after September 6, 2019. It is anticipated that trading of the Shares on the NYSE Arca will cease at the open of market on September 10, 2019, and final liquidation payments are scheduled to be made on or about September 16, 2019. For information concerning the U.S. federal income tax consequences of acquiring, holding, and disposing of Shares, please review the section titled “United States Federal Tax Consequences” in the Prospectus. In addition, shareholders are encouraged to consult their own tax advisors concerning the impact of the liquidation of GLDW in light of their own unique circumstances. Shares of the SPDR ® Long Dollar Gold Trust are listed on NYSE Arca under the symbol “GLDW.” Investing in the Shares involves significant risks. See “Risk Factors” starting on page 15 of the Prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities offered or determined if the Prospectus or this Prospectus Supplement is truthful or complete. Any representation to the contrary is a criminal offense. THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT. The date of this Prospectus Supplement is July 16, 2019.
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Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-206640
PROSPECTUS SUPPLEMENT NO. 2
(to Prospectus dated December 14, 2018)
5,000,000 Shares of Beneficial Interest
SPDR® LONG DOLLAR GOLD TRUST, A SERIES
OF WORLD GOLD TRUST
This Prospectus Supplement No. 2 (“Supplement No. 2”) supplements and amends our Prospectus dated December 14, 2018 (the “Prospectus”). This
Prospectus Supplement should be read together with the Prospectus and the Prospectus Supplement dated March 4, 2019.
On July 15, 2019, WGC USA Asset Management Company, LLC (the “Sponsor”), the commodity pool operator of the SPDR® Long Dollar Gold Trust
(“GLDW”), notified the NYSE Arca stock exchange that the Sponsor has determined to voluntarily close GLDW, delist, and liquidate GLDW’s shares
(“Shares”) from trading on the NYSE Arca and to withdraw the Shares from registration under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). GLDW will no longer accept creation and redemption orders after September 6, 2019. It is anticipated that trading of the Shares on
the NYSE Arca will cease at the open of market on September 10, 2019, and final liquidation payments are scheduled to be made on or about
September 16, 2019.
For information concerning the U.S. federal income tax consequences of acquiring, holding, and disposing of Shares, please review the section titled
“United States Federal Tax Consequences” in the Prospectus. In addition, shareholders are encouraged to consult their own tax advisors concerning the
impact of the liquidation of GLDW in light of their own unique circumstances.
Shares of the SPDR® Long Dollar Gold Trust are listed on NYSE Arca under the symbol “GLDW.”
Investing in the Shares involves significant risks. See “Risk Factors” starting on page 15 of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities offered or
determined if the Prospectus or this Prospectus Supplement is truthful or complete. Any representation to the contrary is a criminal offense.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS
POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
The date of this Prospectus Supplement is July 16, 2019.
Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-206640
PROSPECTUS SUPPLEMENT
(to Prospectus dated December 14, 2018)
5,000,000 Shares of Beneficial Interest
SPDR® LONG DOLLAR GOLD TRUST, A SERIES OF
WORLD GOLD TRUST
This Prospectus Supplement supplements and amends our Prospectus dated December 14, 2018 (the “Prospectus”). This Prospectus Supplement should
be read together with the Prospectus.
Effective immediately, references to Aram Shishmanian as a member of the Board of Directors and Principal of WGC USA Asset Management
Company, LLC (the “Sponsor”) are hereby deleted and the following disclosure is hereby added after the last paragraph of the “Principals and Key
Personnel of the CPO” section of the Prospectus:
David Tait, age 57, was appointed to the Board of Directors of the Sponsor effective as of February 25, 2019. Mr. Tait has also served as the Chief
Executive Officer of World Gold Council, the parent company of the Sponsor, since January 2019. Prior to joining World Gold Council, Mr. Tait
served as Executive Producer with EMU Films from April 2016 to January 2019. Mr. Tait served as the Global Head of Fixed Income Macro
Products at Credit Suisse from January 2012 until April 2016. Mr. Tait also served as a Managing Director of Union Bank of Switzerland from
October 2009 until December 2011. He is currently an Independent Member of the Bank of England’s FICC Market Standards Board, which he
joined in July 2017. Mr. Tait is also a major supporter of the National Society for the Prevention of Cruelty to Children and has raised over
£1 million by climbing Mount Everest on five occasions. He was awarded an MBE by the Queen for his services to the charity. Mr. Tait is
currently in the process of becoming a listed principal of the Sponsor.
Carlos Rodriguez, age 46, was appointed to the Board of Directors of the Sponsor effective as of February 25, 2019. Mr. Rodriguez began his
career on Wall Street in the Public Finance Department of Merrill Lynch in July 1996, where he focused on interest rate hedging strategies for
municipal clients and non-for-profit institutions. After working several years covering banking clients, he shifted his focus to trading, where he
rose to manage Merrill Lynch’s proprietary municipal investments portfolio until December 2000. Mr. Rodriguez has since worked at WestLB,
from December 2000 to May 2003, where he managed the bank’s complex guaranteed reinvestment contract business, and BNP Paribas, from
May 2003 to May 2004, where he served as Director and Head of Municipals. From May 2004 to August 2010, Mr. Rodriguez served as Director
and Managing Director of Deutsche Bank, and worked to establish the bank’s public finance efforts. As Managing Director, Mr. Rodriguez
subsequently led Credit Suisse’s global rates structuring effort in London from August 2010 until June 2016. Mr. Rodriguez retired from banking
in June 2016, and remained retired until March 2017, when he launched a private equity fund that focuses on lower middle market companies. He
also devotes his time to personal investing as well as volunteering for local causes and mentoring local entrepreneurs. Mr. Rodriguez is currently
in the process of becoming a listed principal of the Sponsor.
Shares of the SPDR® Long Dollar Gold Trust are listed on NYSE Arca under the symbol “GLDW.”
Investing in the Shares involves significant risks. See “Risk Factors” starting on page 15 of the Prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities offered or
determined if the Prospectus or this Prospectus Supplement is truthful or complete. Any representation to the contrary is a criminal offense.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS
POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
The date of this Prospectus Supplement is March 4, 2019.
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TOPARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT COMMODITYINTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSESCAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOURINTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TOWITHDRAW YOUR PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, ANDADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TOTHESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OFTHEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TOBE CHARGED THIS POOL AT PAGE 56 AND A STATEMENT OF THE PERCENTAGE RETURNS NECESSARY TOBREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 58.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TOEVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU DECIDE TOPARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT,INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 15THROUGH 35.
SWAPS TRANSACTIONS, LIKE OTHER FINANCIAL TRANSACTIONS, INVOLVE A VARIETY OF SIGNIFICANTRISKS. THE SPECIFIC RISKS PRESENTED BY A PARTICULAR SWAP TRANSACTION NECESSARILY DEPENDUPON THE TERMS OF THE TRANSACTION AND YOUR CIRCUMSTANCES. IN GENERAL, HOWEVER, ALLSWAPS TRANSACTIONS INVOLVE SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTYCREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL RISK.
HIGHLY CUSTOMIZED SWAPS TRANSACTIONS IN PARTICULAR MAY INCREASE LIQUIDITY RISK, WHICHMAY RESULT IN A SUSPENSION OF REDEMPTIONS. HIGHLY LEVERAGED TRANSACTIONS MAY EXPERIENCESUBSTANTIAL GAINS OR LOSSES IN VALUE AS A RESULT OF RELATIVELY SMALL CHANGES IN THE VALUEOR LEVEL OF AN UNDERLYING OR RELATED MARKET FACTOR.
IN EVALUATING THE RISKS AND CONTRACTUAL OBLIGATIONS ASSOCIATED WITH A PARTICULAR SWAPTRANSACTION, IT IS IMPORTANT TO CONSIDER THAT A SWAP TRANSACTION MAY BE MODIFIED ORTERMINATED ONLY BY MUTUAL CONSENT OF THE ORIGINAL PARTIES AND SUBJECT TO AGREEMENT ONINDIVIDUALLY NEGOTIATED TERMS. THEREFORE, IT MAY NOT BE POSSIBLE FOR THE COMMODITY POOLOPERATOR TO MODIFY, TERMINATE, OR OFFSET THE POOL’S OBLIGATIONS OR THE POOL’S EXPOSURE TOTHE RISKS ASSOCIATED WITH A TRANSACTION PRIOR TO ITS SCHEDULED TERMINATION DATE.
THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATIONSTATEMENT OF THE TRUST. YOU CAN READ AND COPY THE ENTIRE REGISTRATION STATEMENT AT THEPUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC IN WASHINGTON, D.C.
THE FUND WILL FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ AND COPYTHESE REPORTS AT THE SEC PUBLIC REFERENCE ROOM AT 100 F STREET, N.E., WASHINGTON, D.C. 20549.THE PUBLIC MAY OBTAIN INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM BYCALLING THE SEC AT 1-800-SEC-0330.
THE FILINGS OF THE TRUST ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV.
Regulatory Notices
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION ORTO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCHOTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZEDBY THE TRUST, THE FUND, THE ADMINISTRATOR, THE AUTHORIZED PARTICIPANTS OR ANY OTHERPERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OFAN OFFER TO BUY, NOR SHALL THERE BE ANY OFFER, SOLICITATION, OR SALE OF THE SHARES IN ANYJURISDICTION IN WHICH SUCH OFFER, SOLICITATION, OR SALE IS NOT AUTHORIZED OR TO ANY PERSONTO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER, SOLICITATION, OR SALE.
THE BOOKS AND RECORDS OF THE FUND ARE MAINTAINED AS FOLLOWS: ALL MARKETING MATERIALSARE MAINTAINED AT THE OFFICES OF THE MARKETING AGENT OR THE SPONSOR; CREATION UNITCREATION AND REDEMPTION BOOKS AND RECORDS, ACCOUNTING AND CERTAIN OTHER FINANCIALBOOKS AND RECORDS (INCLUDING FUND ACCOUNTING RECORDS, LEDGERS WITH RESPECT TO ASSETS,LIABILITIES, CAPITAL, INCOME AND EXPENSES, THE REGISTRAR, TRANSFER JOURNALS AND RELATEDDETAILS) AND TRADING AND RELATED DOCUMENTS RECEIVED FROM FUTURES COMMISSION MERCHANTSARE MAINTAINED BY THE ADMINISTRATOR. ALL OTHER BOOKS AND RECORDS OF THE FUND (INCLUDINGMINUTE BOOKS AND OTHER GENERAL CORPORATE RECORDS, TRADING RECORDS AND RELATEDREPORTS) ARE MAINTAINED AT THE FUND’S PRINCIPAL OFFICE, C/O WGC USA ASSET MANAGEMENTCOMPANY, LLC, 685 THIRD AVENUE, 27TH FLOOR, NEW YORK, NEW YORK 10017; TELEPHONE NUMBER(212) 317-3800. SHAREHOLDERS WILL HAVE THE RIGHT, DURING NORMAL BUSINESS HOURS, TO HAVEACCESS TO AND COPY (UPON PAYMENT OF REASONABLE REPRODUCTION COSTS) SUCH BOOKS ANDRECORDS IN PERSON OR BY THEIR AUTHORIZED ATTORNEY OR AGENT. MONTHLY ACCOUNTSTATEMENTS FOR THE FUND CONFORMING TO COMMODITY FUTURES TRADING COMMISSION (THE“CFTC”) AND THE NATIONAL FUTURES ASSOCIATION (THE “NFA”) REQUIREMENTS ARE POSTED ON THESPONSOR’S WEBSITE AT HTTP://WWW.SPDRGOLDSHARES.COM. ADDITIONAL REPORTS ARE POSTED ONTHE SPONSOR’S WEBSITE IN THE DISCRETION OF THE SPONSOR OR AS REQUIRED BY REGULATORYAUTHORITIES. THERE WILL BE DISTRIBUTED TO SHAREHOLDERS OF THE FUND, NOT MORE THAN 90 DAYSAFTER THE CLOSE OF THE FUND’S FISCAL YEAR, CERTIFIED AUDITED FINANCIAL STATEMENTS AND (IN NOEVENT LATER THAN MARCH 15 OF THE IMMEDIATELY FOLLOWING YEAR) THE TAX INFORMATIONRELATING TO SHARES OF THE FUND NECESSARY FOR THE PREPARATION OF SHAREHOLDERS’ ANNUALFEDERAL INCOME TAX RETURNS.
THE DIVISION OF INVESTMENT MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSIONREQUIRES THAT THE FOLLOWING STATEMENT BE PROMINENTLY SET FORTH HEREIN: “NEITHER THEWORLD GOLD TRUST NOR ANY SERIES THEREOF IS A MUTUAL FUND OR ANY OTHER TYPE OF INVESTMENTCOMPANY WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND IS NOTSUBJECT TO REGULATION THEREUNDER.”
AUTHORIZED PARTICIPANTS MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN TRANSACTING INSHARES. SEE “PLAN OF DISTRIBUTION.”
This Prospectus contains information you should consider when making an investment decision about the Shares.You may rely on the information contained in this Prospectus. The Trust and the Sponsor have not authorizedany person to provide you with different information and, if anyone provides you with different or inconsistentinformation, you should not rely on it. This Prospectus is not an offer to sell the Shares in any jurisdiction wherethe offer or sale of the Shares is not permitted.
The Shares are not registered for public sale in any jurisdiction other than the United States.
Authorized Participants may be required to deliver a prospectus when making transactions in the Shares.
The information contained in the sections captioned “Overview of The Gold Industry” and “Overview of theForeign Exchange Markets” is based on information obtained from sources that the Sponsor believes are reliable.
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This Prospectus summarizes certain documents and other information in a manner the Sponsor believes to beaccurate. In making an investment decision, you must rely on your own examination of the Trust, the goldindustry, the operation of the Gold Bullion market, the operation of the currency market and the terms of theoffering and the Shares, including the merits and risks involved. Although the Sponsor believes this informationto be reliable, the accuracy and completeness of this information is not guaranteed and has not beenindependently verified.
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Statement Regarding Forward-looking Statements
This Prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Actof 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and within thePrivate Securities Litigation Reform Act of 1995, as amended, which generally relate to future events or futureperformance. Forward-looking statements usually include the words “may,” “should,” “expect,” “plan,”“anticipate,” “believe,” “estimate,” “predict,” “potential,” “it is likely” or the negative of these terms or othercomparable terminology. All statements (other than statements of historical fact) included in this Prospectus thataddress activities, events or developments that may occur in the future, including such matters as changes incommodity prices and market conditions (for gold, non-U.S. currencies and the Shares), the Trust’s operations,the Sponsor’s plans and references to the Fund’s future success and other similar matters are forward-lookingstatements. These statements are only predictions. Actual events or results may differ materially. Thesestatements are based upon certain assumptions and analyses the Sponsor made based on its perception ofhistorical trends, current conditions and expected future developments, as well as other factors appropriate in thecircumstances. Whether actual results and developments will conform to the Sponsor’s expectations andpredictions, however, is subject to a number of risks and uncertainties, including the special considerationsdiscussed in this Prospectus; general economic, market and business conditions; changes in laws or regulations,including those concerning taxes, made by governmental authorities or regulatory bodies; and other worldeconomic and political developments. See “Risk Factors” starting on page 15. Consequently, all the forward-looking statements made in this Prospectus are qualified by these cautionary statements, and there can be noassurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantiallyrealized, that they will result in the expected consequences to, or have the expected effects on, the Fund’soperations or the value of the Shares. Moreover, neither the Sponsor nor any other person assumes responsibilityfor the accuracy or completeness of the forward-looking statements. Except as required under Item 512 ofRegulation S-K or other applicable securities laws, none of the Trust, the Sponsor or the Marketing Agent isunder a duty to update any of the forward-looking statements to conform such statements to actual results or toreflect a change in the Sponsor’s expectations or predictions.
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Prospectus Summary
This is only a summary of the Prospectus and, while it contains material information about the Fund and theShares, it does not contain or summarize all of the information about the Fund and the Shares contained in thisProspectus which is material and/or which may be important to you. You should read this entire Prospectus,including “Risk Factors” beginning on page 15, before making an investment decision about the Shares.
Definitions used in this Prospectus can be found in the Glossary of Defined Terms in Appendix A.
TRUST STRUCTURE
The Trust
The World Gold Trust (the “Trust”) was formed as a Delaware statutory trust on August 27, 2014. The Trustconsists of multiple series (each, a “Series”). Each Series issues common units of beneficial interest (each, a“Share”) that represent units of fractional undivided beneficial interest in and ownership of such Series. The termof the Trust and each Series is perpetual (unless terminated earlier in certain circumstances). The Trust wasorganized in separate series as a Delaware statutory trust rather than as separate statutory trusts in order toachieve certain administrative and other efficiencies. The material terms of the Trust Declaration of Trust arediscussed in greater detail under the section “The Declaration of Trust.”
The Fund
The Series offered pursuant to this Prospectus is the SPDR® Long Dollar Gold Trust (the “Fund”). The Fundseeks to track the performance of the Solactive GLD® Long USD Gold Index (“Index”), less the expenses of theFund’s operations. The Shares of the Fund represent units of fractional undivided beneficial interest in andownership of the Fund. The Fund issues Shares on a continuous basis. The Shares may be purchased from theFund only in one or more blocks of 1,000 Shares (each block of 1,000 Shares, a “Creation Unit”). The Fundissues and redeems Shares from time to time in Creation Units to institutional investors referred to as“Authorized Participants.” Creation Units are offered continuously at the net asset value (“NAV”) for1,000 Shares on the day that an order to create a Creation Unit is accepted by the Fund. Fund Shares trade underthe ticker symbol GLDW on NYSE Arca, Inc. (“NYSE Arca”). Authorized Participants and other investors maybuy and sell Shares in the secondary market. Authorized share capital is unlimited and the par value of the sharesis $0.00. The principal offices of the Trust and the Fund are located at c/o WGC USA Asset ManagementCompany, LLC, 685 Third Avenue, 27th Floor, New York, New York 10017.
The Index
The Index is designed to represent the daily performance of a long position in physical gold (as represented bythe Gold Price) and a short position in the FX Basket comprised of each of the Reference Currencies (i.e., a longUSD exposure versus the FX Basket). In simple terms, the Index reflects the price of Gold in U.S. dollarsadjusted by the price of each Reference Currency comprising the FX Basket against the U.S. dollar. The Index isdesigned to measure daily Gold Bullion returns as though an investor had invested in Gold Bullion in terms ofthe FX Basket comprised of the Reference Currencies reflected in the Index. In general, the Index is intended toincrease in value when the price of gold (as measured by the Gold Price) increases and/or when the value of theUSD increases against the value of the FX Basket comprised of the Reference Currencies. In general, the Index isintended to decrease in value when the price of gold (as measured by the Gold Price) decreases and/or when thevalue of the USD declines against the value of the FX Basket comprised of Reference Currencies. The net impactof these changes determines the value of the Index on a daily basis.
The Index Provider maintains and calculates the Index, and has licensed to the Sponsor an exclusive right to usethe Index and associated marks in connection with the Fund and in accordance with the terms of the Index
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License Agreement. See “Risk Factors — Risks Related to the Fund’s Operations — Risks Related to the ServiceProviders — There are conflicts of interest among the Custodian, the Gold Delivery Provider, the Index Providerand their affiliates and the Fund.”
The daily price of gold in USD generally is the primary driver of Index returns. Historically, fluctuations in theprice of the Reference Currencies have accounted for only a small portion of Index returns. Of course, suchresults are hypothetical based on back-testing of the Index and are not necessarily indicative of future results. TheIndex is not designed to simply reflect the price of spot trades in the Reference Currencies comprising the FXBasket (which per market convention assume delivery of the Reference Currencies). Rather, the Index assumespositions in the Reference Currencies comprising the FX Basket are rolled forward and not physically settled.The Index does this by entering on each Index Business Day into spot-next trades that are closed out on the nextIndex Business Day against spot transactions. The Index approximates the cost of entering into a spot-next tradeby linearly interpolating the cost of that trade based on the WM/Reuters “SW – Spot Week (One Week)” forwardrates and a spot transaction. The Spot Next Forward Points adjust the spot price to reflect the cost of rollingReference Currency positions.
The performance of the Fund is expected to deviate slightly from the performance of the Index due to “trackingerror.” This “tracking error” results primarily from the fees paid by the Fund to the Sponsor and to the GoldDelivery Provider.
Fund Shares
As with the Index, Shares are intended to increase in value when the price of the Gold Bullion held by the Fundincreases (as measured by the Gold Price) and/or when the price of the USD increases against the value of theReference Currencies comprising the FX Basket. Fund Shares are intended to decrease in value when the valueof the Gold Bullion held by the Fund decreases (as measured by the Gold Price) and/or when the price of theUSD declines against the value of the Reference Currencies comprising the FX Basket. The net impact of thesechanges determines the value of the Fund on a daily basis. Although investors purchase Shares of the Fund inUSD, the Fund is designed to provide investors with the economic effect of holding gold in terms of the FXBasket comprised of the Reference Currencies, rather than the USD.
The Fund Is a Passive Investment Vehicle
The Fund is a passive investment vehicle and is designed to track the performance of the Index regardless of: (i) theprice of gold or any Reference Currency; (ii) market conditions; and (iii) whether the Index is increasing ordecreasing in value. The Fund’s holdings generally consist entirely of Gold Bullion. Substantially all of the Fund’sGold Bullion holdings are delivered by Authorized Participants in exchange for Fund Shares. The Fund does nothold any of the Reference Currencies. The Fund generally does not hold USDs (except from time to time in verylimited amounts to pay Fund expenses). The Fund’s Gold Bullion holdings are not managed and the Fund does nothave any investment discretion. Because the Fund generally holds only Gold Bullion (and not USDs or theReference Currencies), the actual economic impact of changes in the value of the Reference Currencies against theUSD from day to day can be reflected in the Fund only by moving an amount of Gold Bullion ounces of equivalentvalue into or out of the Fund on a daily basis. Therefore, the Fund seeks to track the performance of the Index byentering into a daily transaction with the Gold Delivery Provider as described herein.
The Gold Delivery Agreement
The terms of the daily transaction with the Gold Delivery Provider are set forth in a written contract between theFund and the Gold Delivery Provider (the “Gold Delivery Agreement”). Pursuant to the terms of the GoldDelivery Agreement, on each Business Day, the Fund enters into a transaction to deliver Gold Bullion to, or
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receive Gold Bullion from, the Gold Delivery Provider. The amount of Gold Bullion transferred approximatesthe performance of the Fund’s holdings of Gold Bullion as though they had been denominated in the FX Basketcomprised of Reference Currencies in the proportions specified in the Index. In general, if there is a currencygain (i.e., the value of the USD against the Reference Currencies comprising the FX Basket increases), the Fundreceives Gold Bullion. In general, if there is a currency loss (i.e., the value of the USD against the ReferenceCurrencies comprising the FX Basket decreases), the Fund delivers Gold Bullion. In this manner, the amount ofthe Gold Bullion held by the Fund is adjusted to reflect the daily change in the value of the FX Basket comprisedof Reference Currencies against the USD. Merrill Lynch International, in its role as Gold Delivery Provider actsas the counterparty of the Fund with respect to the Gold Delivery Agreement. See “Risk Factors — Risks Relatedto the Fund’s Operations — Risks Related to the Service Providers — There are conflicts of interest among theCustodian, the Gold Delivery Provider, the Index Provider and their affiliates and the Fund.”
The Sponsor
The Sponsor of the Trust and the Fund is WGC USA Asset Management Company, LLC (“WGC AM”). TheSponsor is a Delaware limited liability company and was formed on August 1, 2014. Under the DelawareLimited Liability Company Act and the governing documents of the Sponsor, WGC (US) Holdings, Inc.(“WGCUS”), the sole member of the Sponsor, is not responsible for the debts, obligations and liabilities of theSponsor solely by reason of being the sole member of the Sponsor. WGC AM is wholly-owned by WGCUS, acorporation registered under Delaware law.
The Sponsor is responsible for establishing the Fund and for the registration of the Shares. The Sponsor generallyoversees the performance of the Fund’s principal service providers, but does not exercise day-to-day oversight oversuch service providers. The Sponsor maintains a public website on behalf of the Fund, containing information aboutthe Fund and the Shares. The Internet address of the Sponsor’s website is http://www.spdrgoldshares.com. ThisInternet address is only provided here as a convenience to you, and the information contained on or connected to theFund’s website is not considered part of this Prospectus. The general role and responsibilities of the Sponsor arediscussed in greater detail under the section “The Declaration of Trust — The Sponsor.”
The Commodity Pool Operator (“CPO”)
WGC AM is the CPO of the Fund and has been registered in such capacity with the CFTC and a member of theNFA since August 19, 2015. The Sponsor has not previously operated any other pools or traded any otheraccounts. The CPO is, among other things, generally responsible for monitoring the Gold Delivery Provider’scalculation of Gold Bullion due to, or due from, the Fund under the Gold Delivery Agreement. Past performanceof the Fund is available on page 37.
The Trustee
Delaware Trust Company, a Delaware trust company with trust powers (“DTC”), serves as the sole trustee of theTrust (the “Trustee”). The Trustee’s duties and liabilities with respect to the offering of the Shares and themanagement of the Trust and the Fund are limited to its express obligations under the Declaration of Trust. Thegeneral role and responsibilities of the Trustee are discussed in greater detail under the section “The Declarationof Trust — The Trustee.”
The Administrator
The Administrator of the Fund is BNY Mellon Asset Servicing, a division of The Bank of New York Mellon(“BNYM”). The Administrator is generally responsible for the day-to-day administration and operation of theFund, including the calculation of the NAV of the Fund and the NAV per Share. The general role andresponsibilities of the Administrator are discussed in greater detail under the section “Description of Key ServiceProviders — The Administrator.”
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The Transfer Agent
The Transfer Agent is BNYM, which serves as the Fund’s transfer agent in connection with Creation andRedemption transactions of Shares and acts as the Fund’s distribution disbursing agent. The Transfer Agentreceives and processes orders from Authorized Participants to create and redeem Creation Units and coordinatesthe processing of such orders with the Custodian and the DTC. The general role and responsibilities of theTransfer Agent are discussed in greater detail under the section “Description of Key Service Providers — TheTransfer Agent.”
The Custodian (Cash Only)
The custodian of the Fund’s cash, if any, is BNYM. BNYM is generally responsible for establishing andmaintaining one or more cash accounts for the Fund. BNYM also maintains books and records segregating theassets of the Fund from the assets of any other series of the Trust. The general role and responsibilities of BNYMas custodian of the Fund’s cash are discussed in greater detail under the section “Description of Key ServiceProviders — The Custodian (Cash Only).”
The Custodian
The Custodian is HSBC Bank plc. The Custodian is responsible for the safekeeping of the Gold Bullion held bythe Fund. This includes (i) the Gold Bullion bars delivered to the Fund in connection with the creation ofCreation Units by Authorized Participants and (ii) the Gold Bullion delivered to the Fund pursuant to the GoldDelivery Agreement. The Custodian also facilitates the transfer of Gold Bullion into and out of the Fund throughGold Bullion accounts it maintains for Authorized Participants, the Gold Delivery Provider and the Fund. TheCustodian is a market maker, clearer and approved weigher under the rules of the London Bullion MarketAssociation (“LBMA”). The general role, responsibilities and regulation of the Custodian are further described insection “Description of Key Service Providers — The Custodian.” See also “Risk Factors — Risks Related to theFund’s Operations — Risks Related to the Service Providers — There are conflicts of interest among theCustodian, the Gold Delivery Provider, the Index Provider or their affiliates and the Fund.”
The Gold Delivery Provider
The Gold Delivery Provider is Merrill Lynch International. The Gold Delivery Provider has entered into the GoldDelivery Agreement with the Fund.
The Marketing Agent
The Marketing Agent is State Street Global Advisors Funds Distributors, LLC. The Sponsor has entered into theMarketing Agent Agreement with the Marketing Agent to assist the Sponsor in marketing the Shares. TheMarketing Agent is a registered broker-dealer with the SEC and is a member of FINRA.
The Trust Is an Emerging Growth Company
The Trust is an “emerging growth company” subject to reduced public company reporting requirements underU.S. federal securities laws. The Trust has not elected to make use of the extended transition period forcomplying with new or revised accounting standards pursuant to Section 107(b) of the Jumpstart Our BusinessStartups Act of 2012, as amended (the “JOBS Act”). This election is irrevocable. However, under the JOBS Act,emerging growth companies like the Trust are subject to reduced public company reporting requirements, asmore fully described in “Risk Factors — Regulatory Risks — The Trust is an emerging growth company subjectto reduced public company reporting requirements.”
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The Trust expects to remain an “emerging growth company” until the earliest of (i) the last day of the fiscal yearon which the fifth anniversary of its initial public offering of Shares occurs and (ii) the Trust becomes a “largeaccelerated filer” within the meaning of the Exchange Act. Other conditions that may trigger a loss of “emerginggrowth company” status, such as certain issuances of non-convertible debt and having annual gross revenues of$1.07 billion or more, are not expected to apply to the Trust due to the limited nature of its operations.
FUND OBJECTIVE
Gold Bullion typically is priced and traded throughout the world in USDs. The Fund has been established as analternative to traditional dollar-based gold investing. Although investors purchase shares of the Fund with USDs,the Fund is designed to provide investors with the economic effect of holding gold in terms of a specific basketof Reference Currencies rather than the USD. The Reference Currencies are the euro, Japanese yen, Britishpound sterling, Canadian dollar, Swedish krona and Swiss franc. Specifically, the Fund seeks to track theperformance of the Solactive GLD® Long USD Gold Index, less the expenses of the Fund’s operations. TheIndex is designed to represent the daily performance of a long position in physical gold and a short position in theFX Basket comprised of each of the Reference Currencies (i.e., a long USD exposure versus the FX Basket). It isdesigned to measure daily Gold Bullion returns as though an investor had invested in gold in terms of the FXBasket comprised of the Reference Currencies reflected in the Index. Accordingly, both the Index and the Fundseek to provide Gold Bullion returns as though an investor had invested in gold in terms of the FX Basketcomprised of the Reference Currencies.
In general, the USD value of an investment in the Fund is expected to increase when both the price of gold goesup and the value of the USD increases against the value of the Reference Currencies comprising the FX Basket(as weighted in the Index). Conversely, the USD value of an investment, in general, is expected to decrease whenthe price of gold goes down and the value of the USD decreases against the value of the Reference Currenciescomprising the FX Basket (as weighted in the Index). If the price of gold increases and the value of the USDdecreases against the value of the Reference Currencies comprising the FX Basket, or vice versa, the net impactof these changes will determine the value of the Fund on a daily basis.
The Fund is a passive investment vehicle and is designed to track the performance of the Index regardless of(i) the value of gold or any Reference Currency; (ii) market conditions; and (iii) whether the Index is increasingor decreasing in value. The Fund’s holdings generally consist entirely of gold. Substantially all of the Fund’sGold Bullion holdings are delivered by Authorized Participants in exchange for Fund Shares. The Fund does nothold any of the Reference Currencies. The Fund generally does not hold USDs (except from time to time in verylimited amounts to pay expenses). The Fund’s Gold Bullion holdings are not managed and the Fund does nothave any investment discretion.
The Fund’s net asset value (“NAV”) goes up or down each Business Day based primarily on two factors. Thefirst is the change in the price of gold measured in USDs from the prior Business Day. This drives the value ofthe Fund’s Gold Bullion holdings measured in USDs up (as gold prices increase) or down (as gold prices fall).The second is the change in the value of the Reference Currencies comprising the FX Basket against the USDfrom the prior Business Day. This drives the value of the Fund’s Gold Bullion holdings measured in theReference Currencies comprising the FX Basket up (when the value of the USD against the Reference Currenciescomprising the FX Basket increases) or down (when the value of the USD against the Reference Currenciescomprising the FX Basket declines). The value of gold and the Reference Currencies comprising the FX Basketare based on publicly available, transparent prices — for gold, the LBMA Gold Price AM, and for currencies, theWMR Fix.
Because the Fund generally holds only Gold Bullion (and not USDs or the Reference Currencies), the actualeconomic impact of changes to the value of the Reference Currencies against the USD from day to day can be
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reflected in the Fund only by moving an amount of Gold Bullion ounces of equivalent value in or out of theFund. Therefore, the Fund seeks to track the performance of the Index by entering into a transaction each IndexBusiness Day with the Gold Delivery Provider. The terms of this transaction are set forth in a written contractbetween the Fund and the Gold Delivery Provider referred to as the “Gold Delivery Agreement.” Pursuant to theterms of the Gold Delivery Agreement, the Fund enters into a transaction to deliver Gold Bullion to, or receiveGold Bullion from, the Gold Delivery Provider each Business Day. The amount of Gold Bullion transferredapproximates the performance of the Fund’s holdings of Gold Bullion as though they had been denominated inthe Reference Currencies comprising the FX Basket in the proportions in which the Reference Currenciescomprising the FX Basket are reflected in the Index. In general, if there is a currency gain (i.e., the value of theUSD against the Reference Currencies comprising the FX Basket increases), the Fund receives Gold Bullion. Ingeneral, if there is a currency loss (i.e., the value of the USD against the Reference Currencies comprising the FXBasket decreases), the Fund delivers Gold Bullion. In this manner, the amount of Gold Bullion held by the Fundis adjusted to reflect the daily change in the value of the Reference Currencies comprising the FX Basket againstthe USD. The Gold Delivery Agreement requires Gold Bullion ounces equal to the value of the Gold DeliveryAmount to be delivered to the custody account of the Fund or Gold Delivery Provider, as applicable.
The Fund does not intend to enter into any other Gold Bullion transactions other than with the Gold DeliveryProvider as described in the Gold Delivery Agreement (except that Authorized Participants will deliver orreceive Gold Bullion from the Fund in connection with the purchase or redemption of Creation Units and theFund will sell Gold Bullion to cover Fund expenses), and the Fund does not intend to hold any ReferenceCurrency or enter into any currency transactions.
Potential advantages of investing in the Shares include:
• Ease and Flexibility of Investment. The Shares are listed and traded on NYSE Arca and provide institutionaland retail investors with indirect access to the Gold Bullion market referenced in terms of the FX Basketcomprised of the Reference Currencies. The Shares may be bought and sold on NYSE Arca and othersecurities exchanges like other exchange-listed securities. Retail investors may purchase and sell Sharesthrough traditional brokerage accounts or other investment accounts. Through a single transaction, theShares permit investors to achieve exposure to bullion and the specified Reference Currencies reflected inthe Index. Unlike a dollar-denominated direct investment in gold or a dollar-denominated investment in agold exchange-traded fund which does not provide exposure to a non-U.S. currency, an investor in the Fundis not required to engage in foreign exchange transactions in order to get exposure to gold in terms of the FXBasket comprised of the Reference Currencies. Instead, an investor can gain such exposure through a singletransaction, thereby avoiding the difficulty of engaging in such foreign exchange transactions.
• Expenses. The Sponsor expects that, for many investors, costs associated with buying and selling the Sharesin the secondary market and the payment of the Trust’s ongoing expenses will be lower than the combinedcosts associated with (i) buying and selling Gold Bullion and storing and insuring Gold Bullion in atraditional allocated account, and (ii) entering into foreign exchange transactions to get exposure to gold interms of the FX Basket comprised of the Reference Currencies.
• Reduced Counterparty Risk. Unlike a product that derives its exposure by entering into unsecured orpartially secured derivative transactions for substantial periods of time, the Fund gets exposure to gold inReference Currency terms through the Gold Delivery Agreement. Under normal circumstances Gold Bulliontypically is delivered to the Fund by the Gold Delivery Provider on a T+2 basis, the standard settlementcycle for Gold, and therefore the Fund’s counterparty risk pursuant to the Gold Delivery Agreementgenerally is limited to two days of changes in the price of the Reference Currencies comprising the FXBasket against the U.S. Dollar. Historically, changes in the price of the Reference Currencies haveaccounted for only a small portion of Index returns, typically less than 1 percentage point on any day(though this may vary depending on market conditions). Consequently, under normal circumstances the
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Sponsor anticipates that the failure by the Gold Delivery Provider to settle its obligations on a T+2 basisgenerally would have no more than a 1 or 2 percent impact on the price of the Fund on any given day.However, under unusual circumstances, such as during periods of significant economic stress or volatility,fluctuations in the prices of one or more Reference Currencies could have a more significant impact on theprice of the Fund and counterparty risk would therefore be potentially more significant. Of course, suchresults are hypothetical based on back-testing of the Index and there can be no guarantee these historicalcorrelations will continue.
• Portfolio Diversification. Gold has historically been seen as a potential portfolio diversifier in times ofmarket stress. The Shares may help to diversify an investor’s portfolio because historically the Index hasexhibited low to negative correlation with both equities and conventional bonds. Of course, such results arehypothetical based on back-testing of the Index and are not necessarily indicative of future results.
• Transparency. The pricing of the Shares is transparent because Share prices are published by the ListingExchange and on the Sponsor’s website at http://www.spdrgoldshares.com and, unlike other products thatseek to provide investors with the performance of gold in terms of foreign currencies by engaging in activemanagement to get foreign currency exposure, the Fund follows a passive index. The Index values and otherkey information about the Index are publicly available.
Investing in the Shares does not insulate the investor from certain risks, including price volatility. See “RiskFactors.”
An investor who purchases the Shares will not be liable for obligations of this Commodity Pool in excess of theamount of the investor’s investment in the Shares.
NEITHER THIS POOL OPERATOR NOR ANY OF ITS TRADING PRINCIPALS HAS PREVIOUSLYOPERATED ANY OTHER POOLS OR TRADED ANY OTHER ACCOUNTS.
GREGORY S. COLLETT HAS NOT OPERATED TRADING PROGRAMS COMPARABLE TO THEFUND WITHIN THE PRIOR FIVE YEARS AND, THEREFORE, THERE ARE NO PERFORMANCEDISCLOSURES RELATING TO HIS TRADING HISTORY. NEITHER JOSEPH R. CAVATONI,WILLIAM J. SHEA, ARAM SHISHMANIAN, ROCCO MAGGIOTTO, NEAL WOLKOFF, LAURA S.MELMAN, NOR WGC (US) HOLDINGS INC. HAS OPERATED TRADING PROGRAMSCOMPARABLE TO THE FUND PREVIOUSLY; THEREFORE, THERE ARE NO PERFORMANCEDISCLOSURES RELATING TO THEIR TRADING HISTORY.
BREAKEVEN POINT PER UNIT OF INITIAL INVESTMENT
For a hypothetical investment in a Share to break even 12 months after investment, assuming a selling price of$120.38, the investment would have to generate 0.50% return or $0.60. See “Breakeven Analysis.”
OPERATION OF THE FUND
The following chart provides a simplified depiction of the operation of the Fund. Specifically, the chart illustratesthat the Fund operates in the following manner: (1) Shares of the Fund are listed on the NYSE Arca and investorsbuy and sell Shares of the Fund through broker-dealers and other intermediaries; (2) Authorized Participants buyand sell Shares in the secondary market, largely in response to changing demand for Fund Shares; (3) AuthorizedParticipants create and redeem Shares for Gold Bullion at the NAV per Share; and (4) the Gold DeliveryProvider makes and takes delivery of Gold Bullion to and from the Fund to reflect changes in the value of theFund’s Gold Bullion holdings in terms of the FX Basket comprised of the Reference Currencies.
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Investors
Listing Exchange andSecondary Market
AuthorizedParticipants
Fund
Gold DeliveryProvider
Shares of the Fund are listed on theNYSE Arca and investors buy and sellShares of the Fund through broker-dealersand other intermediaries.
Authorized Participants buy and sellShares in the Secondary Market inresponse to changing demand for FundShares.
Authorized Participants create andredeem Shares for Gold Bullion at theNAV per Share.
The Gold Delivery Provider makes and takesdelivery of Gold Bullion to and from the Fundto reflect changes in the value of the Fund’sGold Bullion holdings in terms of theReference Currency reflected in the Index.
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PRINCIPAL OFFICES
The Fund’s office is located at 685 Third Avenue, 27th Floor, New York, New York 10017 and its telephonenumber is 212-317-3800. The Sponsor’s office is located at 685 Third Avenue, 27th Floor, New York, New York10017 and its telephone number is 212-317-3800. The Trustee’s office is located at 2711 Centerville Rd,Suite 400, Wilmington, DE 19808. The Administrator’s office is located at 2 Hanson Place, Brooklyn, New York11217. The Transfer Agent’s office is located at 2 Hanson Place, Brooklyn, New York 11217. The Custodian’soffice is located at 8 Canada Square, London, E14 5HQ, United Kingdom. The Gold Delivery Provider’s office islocated at Merrill Lynch International, 2 King Edward Street, London, EC1A 1HQ, United Kingdom. TheMarketing Agent’s office is located at 1 Iron Street, Boston, Massachusetts 02210.
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The Offering
Offering . . . . . . . . . . . . . . . . . . . . . . . . . . The Shares represent units of fractional undivided beneficial interestin and ownership of the Fund.
Use of Proceeds . . . . . . . . . . . . . . . . . . . . Proceeds received by the Fund from the issuance and sale of CreationUnits will consist of Gold Bullion deposits. During the life of theFund such proceeds will only be (1) held by the Fund, (2) transferredby the Fund to or from the Gold Delivery Provider pursuant to theGold Delivery Agreement, (3) disbursed or sold as needed to pay theFund’s ongoing expenses and (4) distributed to AuthorizedParticipants in connection with the redemption of Creation Units. Seethe section “Description of Key Service Providers — The GoldDelivery Provider and the Gold Delivery Agreement” for moredetails.
Creation and Redemption . . . . . . . . . . . . The Fund issues and redeems the Shares from time to time, but onlyin large aggregations of Shares (as of the date of this Prospectus,1,000 Shares) referred to as Creation Units. Creation Units may becreated or redeemed only by Authorized Participants. The creationand redemption of Creation Units require the delivery to the Fund orthe distribution by the Fund of the amount of Gold Bullionrepresented by the Creation Units being created or redeemed. Thedollar amount of a Creation Unit is a function of the NAV of thenumber of Shares included in the Creation Unit. AuthorizedParticipants may sell the Shares included in the Creation Units theycreate to other investors. See the section “Operation of the Fund —Creation and Redemption of Shares” for more details.
Net Asset Value . . . . . . . . . . . . . . . . . . . . The NAV of the Fund is the aggregate value of the Fund’s assets lessits liabilities (which include estimated accrued but unpaid fees andexpenses). The NAV of the Fund is calculated based on the price ofgold per ounce applied against the number of ounces of gold ownedby the Fund. For purposes of calculating NAV, the number of ouncesof gold owned by the Fund (i) is adjusted up or down on a daily basisas set forth in the Gold Delivery Agreement to reflect the GoldDelivery Amount; and (ii) reflects the amount of gold delivered into(or out of) the Fund on a daily basis by Authorized Participantscreating and redeeming Shares. Except as otherwise described herein,in determining the NAV of the Fund, the Administrator generally willvalue the Gold Bullion held by the Fund on the basis of the LBMAGold Price AM. If no LBMA Gold Price AM is made on a particularevaluation day or if the LBMA Gold Price AM has not beenannounced by 12:00 p.m. New York time on a particular evaluationday (including a Business Day that is not an Index Business Day), thenext most recent LBMA Gold Price AM is used in the determination
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of the NAV of the Fund, unless the Sponsor determines that suchprice is inappropriate to use as the basis for such determination. If theSponsor determines that such price is inappropriate to use, it shallidentify an alternate basis for evaluation of the Gold Bullion held bythe Fund.
Although the Fund does not hold the Reference Currencies, the GoldDelivery Provider generally values the Reference Currencies based onthe rates in effect as of the WMR FX Fixing Time, which is generally9:00 AM London Time, though other pricing sources may be used ifthis rate is delayed. The Administrator determines the NAV of theFund on each Business Day as of 12:00 PM New York Time.
The Administrator also determines the NAV per Share, which equalsthe NAV of the Fund, divided by the number of outstanding Shares.
Purchases and Sales in the SecondaryMarket . . . . . . . . . . . . . . . . . . . . . . . . . The Shares of the Fund are listed and traded on NYSE Arca and other
national securities exchanges.
Creation Units of Shares in the Fund may be created or redeemedonly by Authorized Participants. It is expected that Creation Units inthe Fund will be created when there is sufficient demand for Shares inthe Fund as when, for example, the market price per Share is at apremium to the NAV per Share. Authorized Participants are expectedto sell such Shares to the public at prices that are expected to reflect,among other factors, the intra-day value of gold and the FX Basketcomprised of the Reference Currencies and the supply of and demandfor Shares at the time of sale. Similarly, it is expected that CreationUnits in the Fund will be redeemed when the market price per Shareof such Fund is at a discount to the NAV per Share. Retail investorsseeking to purchase or sell Shares on any day are expected to effectsuch transactions in the secondary market, on NYSE Arca or othernational securities exchanges, at the market price per Share, ratherthan in connection with the creation or redemption of Creation Units.
The market price of the Shares of the Fund is not identical to theend-of-day NAV per Share. However, the market price per Share isexpected to be close to the intra-day value of the Fund, which isprovided on the Fund’s website at http://www.spdrgoldshares.com.Investors are able to use the indicative intra-day value per Share as areference to help determine if they want to purchase or sell Shares inthe secondary market. The indicative intra-day value per Share of theFund is based on the prior day’s final NAV, adjusted four times perminute throughout the trading day to reflect the continuous estimatedprice changes of the Fund’s investments in gold and the value of theReference Currencies to provide a continuously updated estimatedNAV per Share. Retail investors may purchase and sell Shares throughtraditional brokerage accounts or other intermediaries. Purchases orsales of Shares may be subject to customary brokerage commissions
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and other transaction charges. Investors are encouraged to review theterms of their brokerage accounts for applicable charges.
Fund Expenses . . . . . . . . . . . . . . . . . . . . . The Fund’s only ordinary recurring expenses are the Sponsor’s annualfee of 0.33% of the NAV of the Fund and the Gold DeliveryProvider’s annual fee of 0.17% of the NAV of the Fund, so that theFund’s total annual expense ratio is expected to be equal to 0.50%.The Sponsor’s annual fee accrues daily and is payable by the Fundmonthly in arrears. The Gold Delivery Provider’s annual fee accruesand is payable by the Fund daily. Fund expenses reduce the NAV ofthe Fund.
Sponsor Fees . . . . . . . . . . . . . . . . . . . . . . The Sponsor receives an annual fee equal to 0.33% of the daily NAVof the Fund. The Sponsor’s compensation is paid in consideration ofthe Sponsor’s (i) services under the Sponsor Agreement and theDeclaration of Trust and (ii) the payment by the Sponsor of theordinary fees and expenses of the Fund, including but not limited to,the fees charged by the Administrator, the Custodian, the IndexProvider, the Marketing Agent and the Trustee. The Sponsor is notrequired to pay any extraordinary expenses not incurred in theordinary course of the Fund’s business. Extraordinary expenses arefees and expenses that are unexpected or unusual in nature, such aslegal claims and liabilities and litigation costs or indemnification orother unanticipated expenses. Extraordinary fees and expenses alsoinclude material expenses which are not currently anticipatedobligations of the Fund. In addition, the Sponsor is not required topay any charges, fees, transaction or other costs in connection withany gold delivery agreement or ISDA agreement in connection withthe delivery of Gold Bullion to or from the Fund. The Fund isresponsible for the payment of such expenses to the extent any suchexpenses are incurred. Routine operational, administrative and otherordinary expenses are not deemed extraordinary expenses.
Gold Delivery Agreement . . . . . . . . . . . . The Gold Delivery Agreement is an agreement between the Fund andthe Gold Delivery Provider pursuant to which Gold is delivered to orfrom the Fund to reflect the Fund’s currency gains and losses. Theamount of Gold Bullion transferred essentially is equivalent to theFund’s profit or loss as if the Fund had exchanged the ReferenceCurrencies comprising the FX Basket, in the proportion in which theyare reflected in the Index, for USDs in an amount equal to the Fund’sholdings of Gold Bullion on such day. In general, if there is acurrency gain (i.e., the value of the USD against the ReferenceCurrencies comprising the FX Basket increases), the Fund willreceive Gold Bullion. In general, if there is a currency loss (i.e., thevalue of the USD against the Reference Currencies comprising the FXBasket decreases), the Fund will deliver Gold Bullion. In this manner,the amount of Gold Bullion held by the Fund is adjusted to reflect thedaily change in the value of the Reference Currencies comprising theFX Basket against the USD.
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Voting Rights . . . . . . . . . . . . . . . . . . . . . Shareholders have no voting rights except as the Sponsor mayconsider desirable and so authorize in its sole discretion.
Termination Events . . . . . . . . . . . . . . . . . The Sponsor may terminate and liquidate the Fund or the Trust forany reason in its sole discretion. The Sponsor would likely terminateand liquidate the Fund if one of the following events occurs:
• DTC, the securities depository for the Shares, is unwilling orunable to continue as the securities depository for the Shares andthe Sponsor determines that no suitable replacement is available;
• The Shares are de-listed from NYSE Arca and are not listed fortrading on another U.S. national securities exchange within fiveBusiness Days from the date the Shares are de-listed; or
• The Trust fails to qualify for treatment, or ceases to be treated, forU.S. federal income tax purposes, as a grantor trust.
For additional information relating to resignation of the Custodian,termination of the Index License Agreement and termination of theGold Delivery Agreement, see “Risk Factors — Risks Relating to theFund’s Operations — Risks Related to the Custodian — Resignationof the Custodian would likely lead to the termination of the Fund if nosuccessor is appointed,” “Risk Factors — Risks Related to the Fund’sOperations — Risks Relating to the Fund — Loss of intellectualproperty rights related to the Fund, or competing claims overownership of those rights, could adversely affect the Fund and aninvestment in the Shares” and “Risk Factors — Risks Related to theFund’s Operations — Risks Relating to the Gold Delivery Provider,”respectively.
Upon the termination of the Fund, the Sponsor will, within areasonable time after the termination of the Fund, sell all of the GoldBullion not already distributed to Authorized Participants redeemingCreation Units, if any, and, after paying or making provision for theFund’s liabilities, distribute the proceeds to the Shareholders. See“The Declaration of Trust — Termination of the Trust.”
Authorized Participants . . . . . . . . . . . . . . Creation Units may be created or redeemed only by AuthorizedParticipants. Each Authorized Participant must (1) be a registeredbroker-dealer or other securities market participant such as a bank orother financial institution which is not required to register as a broker-dealer to engage in securities transactions, (2) be a DTC Participant,(3) have entered into an agreement to create and redeem Fund Shares,referred to as a “Participant Agreement,” and (4) have established anunallocated Gold Bullion account with the Custodian, or theAuthorized Participant Unallocated Account. The ParticipantAgreement provides the procedures for the creation and redemptionof Creation Units and for the delivery of Gold Bullion required forsuch creations or redemptions. A list of the current AuthorizedParticipants can be obtained from the Administrator or the Sponsor.See “Creation and Redemption of Shares” for more details.
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Clearance and Settlement . . . . . . . . . . . . The Shares are evidenced by global certificates that the Trust issues toDTC. The Shares are available only in book-entry form. Shareholdersmay hold their Shares through DTC, if they are DTC Participants, orindirectly through entities that are DTC Participants.
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Risk Factors
You should consider carefully the risks described below before making an investment decision. You should alsorefer to the other information included in this Prospectus, including the Fund’s financial statements and therelated notes.
RISKS RELATED TO AN INVESTMENT IN SHARES
RISKS RELATED TO GOLD AND THE FX BASKET COMPRISED OF THE REFERENCE CURRENCIES
The value of the Shares relates directly to the value of the gold and the value of the Reference Currenciesagainst the USD comprising the FX Basket. Fluctuations in the price of gold and/or the value of theReference Currencies comprising the FX Basket could materially adversely affect an investment in theShares.
The Shares are designed to closely track the performance of the price of gold in terms of the ReferenceCurrencies comprising the FX Basket, and the value of the Shares relates directly to the value of the gold and thevalue of the Reference Currencies against the USD comprising the FX Basket, less the Fund’s liabilities(including estimated accrued expenses). The price of gold and the price of each Reference Currency against theUSD comprising the FX Basket have fluctuated widely in the past.
Several factors may affect the price of gold, including but not limited to:
• Global gold supply and demand, which is influenced by such factors as forward selling by gold producers,purchases made by gold producers to unwind gold hedge positions, central bank purchases and sales, andproduction and cost levels in major gold-producing countries such as South Africa, China, the United Statesand Australia.
• A significant change in the attitude of speculators and investors toward gold. Should the speculativecommunity take a negative view toward gold, it could cause a decline in world gold prices, negativelyaffecting the price of the Shares.
• A significant increase in gold hedging activity by gold producers. Should there be an increase in the level ofhedge activity of gold producing companies, it could cause a decline in world gold prices, adverselyaffecting the price of the Shares.
• Global or regional political, economic or financial events and situations.
• Investors’ expectations with respect to the rate of inflation.
• Currency exchange rates.
• A widening of interest rate differentials between the cost of money and the cost of gold could negativelyaffect the price of gold, which, in turn, could negatively affect the price of the Shares.
• A combination of rising money interest rates and a continuation of the current low cost of borrowing goldcould improve the economics of selling gold forward. This could result in an increase in hedging by goldmining companies and short selling by speculative interests, which would negatively affect the price ofgold. Under such circumstances, the price of the shares would be similarly affected.
• Investment and trading activities of hedge funds and commodity funds.
• Investor confidence.
If gold markets continue to be subject to sharp fluctuations, this may result in potential losses if you need to sellyour Shares at a time when the price of gold is lower than it was when you made your investment. Even if youare able to hold Shares for the long-term, you may never experience a profit, since gold markets have historicallyexperienced extended periods of flat or declining prices, in addition to sharp fluctuations.
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In addition, investors should be aware that there is no assurance that gold will maintain its long-term value interms of purchasing power in the future. In the event that the price of gold declines, the Sponsor expects thevalue of an investment in the Shares to decline proportionately.
Several factors may affect the value of the Reference Currencies comprising the FX Basket or the USD and, inturn, the amount of Gold Bullion to be transferred in and out of the Fund pursuant to the Gold DeliveryAgreement, including, but not limited to:
• Debt level and trade deficit of the U.S. and the relevant non-U.S. countries;
• Inflation rates of the U.S. and the relevant non-U.S. countries and investors’ expectations concerninginflation rates;
• Interest rates of the U.S. and the relevant non-U.S. countries and investors’ expectations concerning interestrates;
• Global or regional political, economic or financial events and situations;
• Sovereign action to set or restrict currency conversion;
• Monetary policies and other related activities of central banks within the U.S. and other relevant foreignmarkets; and
• Global investment and spending patterns.
These factors interrelate in complex ways. The effect of one factor on the market value of the Fund may offset orenhance the effect of another factor. Daily increases in the value of the Reference Currencies comprising the FXBasket against the USD will negatively affect the daily performance of Shares of the Fund. Conversely, dailydecreases in the value of the Reference Currencies comprising the FX Basket against the USD will positivelyaffect the daily performance of Shares of the Fund.
Future governmental decisions may have a significant impact on the price of gold and the value of theReference Currencies comprising the FX Basket, which may result in a significant decrease or increase inthe value of the net assets and the net asset value of the Fund.
Generally, gold prices reflect the supply and demand of available gold. Governmental decisions, such as theexecutive order issued by the President of the United States in 1933 requiring all persons in the United States todeliver gold to the Federal Reserve or the abandonment of the gold standard by the United States in 1971, havebeen viewed as having a significant impact on the supply and demand of gold and the price of gold. Futuregovernmental decisions may have an impact on the price of gold, and may result in a significant decrease orincrease in the value of the net assets and the net asset value of the Fund.
Governmental intervention with respect to a particular country’s currency can have a significant impact on thevalue of such currency. For example, in July 2005, the Chinese government began to permit the Renminbi tofloat against the USD, which was a shift from the country’s previous policy to the managed floating exchangerate regime, which is still in effect. Moreover, even after shifting to the managed floating exchange rate regime,the People’s Bank of China continues to intervene in the foreign exchange market by buying USDs against theRenminbi. In addition, countries may also devalue their currency. Venezuela, for example, devalued its currency,the Venezuelan bolívar, in 2010, 2013, 2014 and 2018. It cannot be predicted whether governmental interventionregarding a country’s currency will occur, and in cases in which it does occur, it is unknown what impact theintervention will have on a country’s currency. China and Venezuela are used as examples only; neither theRenminbi nor the Venezuelan bolívar is a Reference Currency.
The sale of the Fund’s Gold Bullion to pay expenses at a time of low gold prices or at a time when the valueof a Reference Currency is increasing against the USD could adversely affect the value of the Shares.
The Sponsor sells Gold Bullion to pay Fund expenses on an as-needed basis irrespective of then-current goldprices or currency valuations. The Fund is not actively managed, and no attempt will be made to buy or sell gold
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to protect against or to take advantage of fluctuations in the price of gold or the value of currencies.Consequently, the Fund’s gold may be sold or delivered out of the Fund at a time when the gold price is low, orat a time when the value of a Reference Currencies comprising the FX Basket is increasing against the USD,resulting in a negative effect on the value of the Shares.
DERIVATIVES RISK
The Gold Delivery Agreement comes within the definition of a “swap” as set forth in Section 1a(47) of theCommodity Exchange Act of 1936, as amended, and the rules promulgated thereunder. As a result, thetransactions pursuant to the Gold Delivery Agreement may be deemed a commodity interest under the CEA and a“swap” for these purposes. Based on this analysis, the approximate percentage of the Fund’s assets subject totreatment as commodity interests is potentially 100%. However, this amount is lower on a daily basis as only asmall percentage of the Fund’s assets (i.e., the amount equivalent to the change in value of the ReferenceCurrencies comprising the FX Basket against the USD) would move into or out of the Fund on any day pursuantto the Gold Delivery Agreement.
Because the Gold Delivery Agreement and the transactions contemplated by the Gold Delivery Agreement comewithin the CEA’s “swap” definition, the Fund is subject to the jurisdiction of the CFTC. The Gold DeliveryAgreement is a negotiated, bilateral contract for delivery of physical Gold Bullion; it will not be traded on anorganized exchange and the Gold Bullion delivered pursuant to the Gold Delivery Agreement will not be clearedby a clearing organization. Pursuant to the Gold Delivery Agreement, the Gold Delivery Provider determines thenotional exposure for each Reference Currency comprising the FX Basket based upon their respective Indexweights.
REGULATORY DEVELOPMENTS
Regulatory developments, including the adoption and implementation of new legislation, may cause changes tothe Fund’s operations and profitability. Market participants in the U.S. derivatives markets, and the marketsthemselves, are subject to comprehensive regulation by the CFTC and self-regulatory organizations, such as theNFA. Future regulatory developments could cause changes to the Fund’s ability to implement its investmentstrategies. The regulation of swap transactions in the U.S. is a rapidly changing area of law and is subject tofurther developments by government and judicial action. It is impossible to predict the impact of any futureregulatory change on the Fund, but a regulatory change could be substantial and adverse to the Fund.
As a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), signedinto law on July 21, 2010, the regulation of derivatives has significantly changed. Title VII of the Dodd-FrankAct establishes a new legal framework for OTC derivatives, which has significantly increased the CFTC’s andSEC’s authority over U.S. derivatives markets and market participants. For example, the Dodd-Frank Actmandates that certain swaps be traded on a designated contract market or swap execution facility and cleared by aderivatives clearing organization. In addition, swap dealers are subject to a comprehensive registration schemeand regulation. The Dodd-Frank Act also requires that all bilateral swaps be transacted only by parties thatqualify as eligible contract participants (“ECPs”). For the Fund to qualify as an ECP the Sponsor must beregistered as a CPO and the Fund must have total assets exceeding $10,000,000 at the time that it enters into anyswap to comply with regulatory requirements pertaining to swaps. Although the CFTC and SEC, as well as otherfederal regulators, responsible for promulgating rules to implement the Dodd-Frank Act have adopted many finalrules that are in effect, the full impact of the Dodd-Frank Act remains uncertain.
COUNTERPARTY RISKS
The Fund may be subject to counterparty risks. To achieve the Fund’s investment objectives, the Fund hasentered into the Gold Delivery Agreement, which falls within the CEA’s definition of “swap.” Swap agreementsare generally traded in over-the-counter markets and have only recently become subject to regulation by the
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CFTC. The CFTC’s rules governing swaps do not cover all types of swap agreements in their entirety. Forexample, the Gold Delivery Agreement is not subject to the requirement that it be traded on a designated contractmarket or swap execution facility, or cleared by a derivatives clearing organization. As a result, investors maynot receive the protection of the CEA or the CFTC’s regulations in connection with the Gold DeliveryAgreement. The lack of regulation in these markets could expose investors to significant losses under certaincircumstances, including in the event of insolvency by participants or trading abuse.
The Fund is subject to counterparty credit risk with respect to the Gold Delivery Provider. A counterparty to anuncleared swap is generally a single financial institution rather than a derivatives clearing organization, as is thecase with futures contracts. A single counterparty introduces credit risk to the Fund. For example, if the GoldDelivery Provider becomes insolvent, terminates the Gold Delivery Agreement or otherwise becomes unable toperform its obligations under the Gold Delivery Agreement, the Fund could suffer significant losses, and thevalue of an investor’s investment may decline, while the Fund searches for a new counterparty to perform similarobligations as the Gold Delivery Provider.
The Gold Delivery Agreement is less liquid than a futures contract because it is not traded on an exchange, doesnot have uniform terms and conditions, and, generally, is entered into based upon the creditworthiness of theparties and not transferable without the consent of the other counterparty. The Gold Delivery Agreement containsvarious conditions, covenants, representations, events of default and termination events. If a party triggers certainevents or defaults on certain terms of the Gold Delivery Agreement, then the other party could terminate theGold Delivery Agreement. In that event, it may not be possible for the Fund to enter into another swap agreementor to invest in other financial instruments necessary to achieve the desired exposure consistent with the Fund’sobjective. This, in turn, may prevent the Fund from achieving its investment objective, particularly if the level ofthe Fund’s benchmark reverses all or part of its intraday move by the end of the day.
The Gold Delivery Provider and/or any of its affiliates may be an Authorized Participant or shareholder of theFund, subject to applicable law.
FOREIGN CURRENCY RISK
Foreign currency exchange rates may fluctuate significantly over short periods of time and can be unpredictablyaffected by political developments or government intervention. The value of the foreign currencies included inthe FX Basket may be affected by several factors, including: monetary policies of central banks within therelevant foreign countries or markets; global or regional economic, political or financial events; inflation orinterest rates of the relevant foreign countries and investor expectations concerning inflation or interest rates;debt levels and trade deficits of the relevant foreign countries.
RISKS RELATED TO GOLD
An adverse development may lead to a decrease in Gold Bullion trading prices.
An adverse development with respect to one or more factors such as global gold supply and demand, investors’inflation expectations, exchange rate volatility and interest rate volatility may lead to a decrease in Gold Bulliontrading prices. A decline in prices of gold would have a negative impact on the net asset value of the Fund.
Substantial sales of gold by the official sector could adversely affect an investment in the Shares.
The official sector consists of central banks, other governmental agencies and multi-lateral institutions that buy,sell and hold gold as part of their reserve assets. The official sector holds a significant amount of gold, most ofwhich is static, meaning that it is held in vaults and is not bought, sold, leased or swapped or otherwise mobilizedin the open market. Since 1999, most sales have been made in a coordinated manner under the terms of theCentral Bank Gold Agreement, as amended, under which 18 of the world’s major central banks (including the
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European Central Bank) agree to limit the level of their gold sales and lending to the market. In the event thatfuture economic, political or social conditions or pressures require members of the official sector to liquidatetheir gold assets all at once or in an uncoordinated manner, the demand for gold might not be sufficient toaccommodate the sudden increase in the supply of gold to the market. Consequently, the price of gold coulddecline significantly, which would adversely affect an investment in the Shares.
Crises may motivate large-scale sales of gold which could decrease the price of gold and adversely affect aninvestment in the Shares.
The possibility of large-scale distress sales of gold in times of crisis may have a negative impact on the price ofgold and adversely affect an investment in the Shares. For example, the 2008 financial credit crisis resulted insignificantly depressed prices of gold largely due to forced sales and deleveraging by institutional investors suchas hedge funds and pension funds. Crises in the future may impair gold’s price performance which would, inturn, adversely affect an investment in the Shares.
Purchasing activity in the gold market associated with the delivery of Gold Bullion to the Fund inexchange for Creation Units may cause a temporary increase in the price of gold. This increase mayadversely affect an investment in the Shares.
Purchasing activity associated with acquiring the Gold Bullion required for deposit into the Fund in connectionwith the creation of Creation Units may temporarily increase the market price of gold, which would likely resultin higher prices for the Shares. Temporary increases in the market price of gold may also occur as a result of thepurchasing activity of other market participants. Other market participants may attempt to benefit from anincrease in the market price of gold that may result from increased purchasing activity of gold connected with theissuance of Creation Units. Consequently, the market price of gold may decline immediately after Creation Unitsare created. If the price of gold declines, it will have a negative impact on the value of the Shares.
The price of gold may be affected by the sale of gold by exchange traded funds, or ETFs, or other exchangetraded vehicles tracking gold markets.
To the extent existing ETFs, or other exchange-traded vehicles tracking gold markets, represent a significantproportion of demand for physical Gold Bullion, large redemptions of the securities of these ETFs or otherexchange traded vehicles could negatively affect physical Gold Bullion prices and the price and NAV of theShares.
The value of the Gold Bullion held by the Fund will be determined using the LBMA Gold Price AM.Potential discrepancies in the calculation of the LBMA Gold Price AM, as well as any future changes tothe LBMA Gold Price AM, could affect the value of the Gold Bullion held by the Fund and could have anadverse effect on the value of a methodology used to calculate the investment in the Shares.
The LBMA Gold Price is determined twice each Business Day (10:30 a.m. and 3:00 p.m. London time) by theparticipants in a physically settled, electronic and tradable auction administered by the IBA. The IBA oversees abidding process that determines the price of gold by matching buy and sell orders submitted by the participantsfor the applicable auction time. The NAV of the Fund is determined each day that the Fund’s principal market,NYSE Arca, is open for regular trading, based on the price of gold per ounce applied against the number ofounces of gold owned by the Fund. In determining the Fund’s NAV, the Administrator generally will value theGold Bullion held by the Fund using the 10:30 a.m. LBMA Gold Price, which is commonly referred to as theLBMA Gold Price AM. If no LBMA Gold Price AM is made on a particular evaluation day or if the LBMA GoldPrice AM has not been announced by 12:00 p.m. New York time on a particular evaluation day (including aBusiness Day that is not an Index Business Day), the next most recent LBMA Gold Price AM is used in thedetermination of the NAV of the Fund, unless the Sponsor determines that such price is inappropriate to use asthe basis for such determination. While the Trust, the Sponsor, and the Administrator do not participate in
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establishing the LBMA Gold Price AM, an affiliate of the Custodian, HSBC Bank plc, is a direct participant inestablishing the LBMA Gold Price AM.
In the event that the LBMA Gold Price AM does not prove to be an accurate benchmark and the LBMA GoldPrice AM varies materially from the price determined by other mechanisms, the NAV of the Fund and the valueof an investment in the Shares could be adversely affected. Any future developments in the benchmark, to theextent they have a material impact on the LBMA Gold Price AM, could adversely affected the NAV of the Fundand the value of an investment in the Shares. Further, the calculation of the LBMA Gold Price AM is not anexact process. Rather, it is based upon a procedure of matching orders from participants in the auction processand their customers to sell gold with orders from participants in the auction process and their customers to buygold at particular prices. The LBMA Gold Price AM does not therefore purport to reflect each buyer or seller ofgold in the market, nor does it purport to set a definitive price for gold at which all orders for sale or purchasewill take place on that particular day or time. All orders placed into the auction process by the participants will beexecuted on the basis of the price determined pursuant to the LBMA Gold Price AM auction process (providedthat orders may be cancelled, increased or decreased while the auction is in progress). It is possible thatelectronic failures or other unanticipated events may occur that could result in delays in the announcement of, orthe inability of the system to produce, an LBMA Gold Price AM on any given date.
If concerns about the integrity or reliability of the LBMA Gold Price AM arise, even if eventually shown to bewithout merit, such concerns could adversely affect investor interest in gold and therefore adversely affect theprice of gold and the value of an investment in the Shares. Because the NAV of the Fund is determined using theLBMA Gold Price AM, discrepancies in or manipulation of the calculation of the LBMA Gold Price AM couldhave an adverse impact on the value of an investment in the Shares. Furthermore, any concern about the integrityor reliability of the pricing mechanism could disrupt trading in gold and products using the LBMA Gold PriceAM, such as the Shares. In addition, these concerns could potentially lead to both changes in the manner inwhich the LBMA Gold Price AM is calculated and/or the discontinuance of the LBMA Gold Price AMaltogether. Each of these factors could lead to less liquidity or greater price volatility for gold and products usingthe LBMA Gold Price AM, such as the Shares, or otherwise could have an adverse impact on the trading price ofthe Shares.
Because the Fund invests only in gold, an investment in the Fund may be more volatile than an investmentin a more broadly diversified portfolio.
The Fund invests only in gold. As a result, the Fund’s holdings are not diversified. Accordingly, the Fund’s netasset value may be more volatile than another investment vehicle with a more broadly diversified portfolio andmay fluctuate substantially over short or long periods of time. The price of gold can be volatile because gold iscomparatively less liquid than other commodities. Fluctuations in the price of gold are expected to have a directimpact on the value of the shares.
An investment in the Fund may be deemed speculative and is not intended as a complete investment program. Aninvestment in Shares should be considered only by persons financially able to maintain their investment and whocan bear the risk of loss associated with an investment in the Fund. Investors should review closely the objectiveand strategy and redemption provisions of the Fund, as discussed herein, and familiarize themselves with therisks associated with an investment in the Fund.
An investment in the Shares may be adversely affected by competition from other methods of investing ingold.
The Fund competes with other financial vehicles, including traditional debt and equity securities issued bycompanies in the gold industry and other securities backed by or linked to gold, direct investments in gold andinvestment vehicles similar to the Fund. Market and financial conditions, and other conditions beyond theSponsor’s control, may make it more attractive to invest in other financial vehicles or to invest in gold directly,which could limit the market for the Shares and reduce the liquidity of the Shares.
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RISKS RELATED TO THE REFERENCE CURRENCIES COMPRISING THE FX BASKET
Currency exchange rates can be volatile and difficult to predict. This volatility could materially andadversely affect the performance of the Shares.
Currency exchange rates are influenced by the factors identified above and may also be influenced by, amongother things: changing supply and demand for a particular currency; monetary policies of governments (includingexchange control programs, restrictions on local exchanges or markets and limitations on foreign investment in acountry or on investment by residents of a country in other countries); changes in balances of payments andtrade; trade restrictions; and currency devaluations and revaluations. Also, governments from time to timeintervene in the currency markets, directly and by regulation, in order to influence prices directly. These eventsand actions are unpredictable. The resulting volatility in the USD/Reference Currency exchange rates couldmaterially and adversely affect the performance of the Shares.
The value of any currency, including the Reference Currencies, relative to the USD may be affected bycomplex political and economic factors.
The exchange rate of each Reference Currency in terms of the USD is subject at any moment to the supply anddemand for the currencies, and changes in the exchange rates result over time from the interaction of manyfactors directly or indirectly affecting economic and political conditions in the various countries, includingeconomic and political developments in other countries. Currency exchange rates may be particularly affected bythe relative rates of inflation, interest rate levels, balance of payments and the extent of governmental surplusesor deficits in non-U.S. countries and in the United States, all of which are in turn sensitive to the monetary, fiscaland trade policies pursued by the governments of such non-U.S. countries, the United States and other countriesimportant to international trade and finance.
Governments may use a variety of techniques, such as intervention by the central bank or imposition ofregulatory controls or taxes, to affect the exchange rates of their respective currencies. They also may issue a newcurrency to replace an existing currency or alter the exchange rate or relative exchange characteristics bydevaluation or revaluation of a currency. The liquidity and trading value of the currencies could be affected bythe actions of governments, which could change or interfere with theretofore freely determined currencyvaluation, fluctuations in response to other market forces and the movement of currencies across borders.
The currency market is a global, around-the-clock market. Therefore, the hours of trading for the Shares will notalways conform to the hours during which non-U.S. currencies and USDs are traded. Significant price and ratemovements may take place in the underlying foreign exchange markets that will not be reflected immediately inthe price of the Shares.
Substantial purchases of a Reference Currency by the official sector could adversely affect an investmentin the Shares.
The official sector holds a significant amount of various foreign currencies that can be mobilized in the openmarket. In the event that future economic, political or social conditions or pressures require members of theofficial sector to purchase a specific foreign currency simultaneously or in an uncoordinated manner, the supplyfor such currency might not be sufficient to accommodate the sudden increase in the demand of the currency tothe market. Consequently, the price of a Reference Currency could increase, which could adversely affect aninvestment in the Shares.
Because the value of the Fund relates to the prices of the Reference Currencies comprising the FX Basket,which are determined using the WMR Fix, potential discrepancies in, or manipulation of, the calculationof the WMR Fix could affect the value of the Reference Currencies comprising the FX Basket and couldhave an adverse effect on the value of an investment in the Shares.
Any discrepancies in, or manipulation of, the calculation of the WMR Fix could have an adverse impact on thevalue of an investment in the Shares. Furthermore, concerns about the integrity or reliability of the pricing
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mechanism could disrupt trading in the Reference Currencies comprising the FX Basket and products using theWMR Fix, such as the Shares. In addition, these concerns could potentially lead to both changes in the manner inwhich the WMR Fix is calculated and/or the discontinuance of the WMR Fix altogether. Each of these eventscould lead to less liquidity or greater price volatility for the Reference Currencies comprising the FX Basket andproducts using the WMR Fix, such as the Shares, or otherwise could have an adverse impact on the trading priceof the Shares. The use of an alternative indicator for the price of the Reference Currencies could result inmaterially different pricing of transactions under the Gold Delivery Agreement, which could result in materiallydifferent valuations of the Fund’s Shares. Future changes to, or the discontinuance of, the WMR Fix may have amaterial effect on the Fund’s operations, including the creation or redemption of Shares, or the trading price ofShares.
RISKS RELATED TO THE INDEX
The Index is calculated without regard to the Fund. The Index Provider does not have any obligation tothe Fund or its Shareholders other than as set forth in the Index License Agreement.
There is no assurance that the Index Provider will compile the Index accurately, or that the Index will bedetermined, composed or calculated accurately. The Index Provider does not have any obligation to take theneeds of the Fund or its Shareholders into account when calculating the Index or making changes to the Indexother than as set forth in the Index License Agreement. While the Index Provider does provide descriptions ofwhat the Index is designed to achieve, the Index Provider does not provide any warranty or accept any liability inrelation to the quality, accuracy or completeness of data in respect of its indices, and does not guarantee that theIndex will be in line with the described index methodology.
The Fund is designed to track the performance of the Index regardless of whether the Index is increasing ordecreasing in value. Consequently, the Fund does not provide any warranty or guarantee for the performance ofthe Index or warranty or guaranty against Index Provider errors. Errors with respect to the calculation, quality,accuracy and completeness of the Index or the data used to calculate the Index may occur from time to time andmay not be identified and corrected for a period of time, if at all. Gains, losses or costs associated with theperformance of the Index and Index Provider errors generally will be borne by the Fund and its Shareholders andcould have a material negative impact on the performance of the Index and the Fund.
Under certain limited circumstances, the Calculation Agent for the Index has discretion in relation to theIndex and is under no obligation to consider your interests as holder of the Shares.
Solactive AG acts as the Calculation Agent of the Index and is responsible for calculating and maintaining theofficial closing levels of the Index, maintaining the Index and developing the guidelines and policies governingits composition and calculation. The rules governing the Index may be amended at any time by Solactive AG, inits sole discretion, and the rules also permit the use of discretion by Solactive AG in relation to the Index inspecific instances, including but not limited to the determination of the levels to be used in the event of marketdisruptions that affect its ability to calculate and publish the levels of the Index and the interpretation of rulesgoverning the Index.
In addition, following the occurrence of certain extraordinary events, as described under “Market DisruptionEvents and Extraordinary Events,” the Calculation Agent for the Index has discretion, acting in good faith and ina commercially reasonable manner, to use different pricing sources on a specific date of its choosing in the eventof certain extraordinary events, such as certain changes in law, or where it is reasonably necessary to do so toreflect the purpose of the Index.
Although the Calculation Agent for the Index is obligated to make all determinations and take all action inrelation to the Index acting in good faith and a commercially reasonable manner, it should be noted that suchdiscretion could have an impact, positive or negative, on the closing level of the Index. The Calculation Agent forthe Index is under no obligation to consider your interests as a holder of the Shares in taking any actions thatmight affect the value of your Shares.
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The Index is described as a “notional” or “synthetic” portfolio or strategy.
The Index’s exposures to the Gold Price and the FX Basket comprised of Reference Currencies are purelynotional and will exist solely in the records maintained by or on behalf of the Calculation Agent for the Index.There is no actual portfolio of assets to which any person is entitled or in which any person has any ownershipinterest. Consequently, you will not have any claim against any of the reference assets reflected in the Index.
The Index has a limited operating history and may perform in unanticipated ways.
The Index has been calculated on a “live” basis since July 20, 2016. Therefore, the Index has limited operatinghistory. Any back-testing or similar analysis performed by any person in respect of the Index has inherentlimitations and should be considered illustrative only. Past performance is not indicative of future performanceand does not guarantee future results.
The Index may be removed or replaced if certain extraordinary events occur.
Following the occurrence of certain extraordinary events, as described under “Market Disruption Events andExtraordinary Events,” the Index may cease calculation or use different pricing sources. You should realize thatchanging pricing sources may affect the performance of the Index, and therefore, the return on the Shares, as thereplacement pricing sources may result in significantly better or worse performance of the Fund than the originalpricing sources.
RISKS RELATED TO THE FUND
The Fund is a passive investment vehicle. It is not actively managed and is designed to track the Indexduring periods in which the Index is flat or declining as well as when the Index is rising. This means thatthe value of the Shares may be adversely affected by Fund losses that, if the Fund had been activelymanaged, it might have been possible to avoid.
The Fund does not manage its portfolio to sell Gold Bullion at times when its price is high, or acquire GoldBullion at low prices in the expectation of future price increases. It also means that the Fund does not use any ofthe hedging techniques available to professional gold investors to attempt to reduce the risks of losses resultingfrom gold price decreases. The Fund does not attempt to manage or hedge currency gains or losses. Moreover,transfers of Gold Bullion into or out of the Fund pursuant to the Gold Delivery Agreement are not offset by Fundpurchases or sales of Gold Bullion in anticipation of or in response to changes in foreign exchange rates. Anylosses sustained by the Fund will adversely affect the value of the Shares.
The Fund’s performance may deviate from changes in the levels of its Index.
Although the objective of the Fund is to track the performance of the Index, less fees and expenses, the Fund’sperformance will not replicate the performance of the Index for a number of reasons. Fund fees and expenses,which are not accounted for by the Index, will have a negative impact on the Fund’s performance and cause theperformance of the Fund to deviate from the performance of the Index (i.e., create “tracking error” between theFund and the Index). The Gold Delivery Amount is calculated by the Gold Delivery Provider, while the Index iscalculated and published by the Index Provider. The methodologies used to calculate the Gold Delivery Amountand the Index include complicated mathematical calculations and, in the event of a disruption in the relevantmarkets or the occurrence of other unusual events, these methodologies allow the exercise of discretion by theGold Delivery Provider and the Index Provider, respectively. No assurance can be given that the Gold DeliveryProvider, in calculating the Gold Delivery Amount, and the Index Provider, in calculating the Index, will produceequivalent results, particularly in the event of a disruption in the relevant markets or the occurrence of otherunusual events. Furthermore, the failure of the Gold Delivery Provider to perform its obligations under the GoldDelivery Agreement, the failure of the Index Provider to calculate the Index in accordance with the Indexmethodology, or other unusual circumstances may also create tracking error between the Fund and the Index.
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The costs inherent in buying or selling Fund shares may detract significantly from investment results.
Buying or selling Shares on an exchange involves two types of costs that apply to all securities transactionseffectuated on an exchange. When buying or selling Shares of the Fund through a broker or other intermediary,you will likely incur a brokerage commission or other charges imposed by that broker or intermediary. Inaddition, you may incur the cost of the “spread,” that is, the difference between what investors are willing to payfor Shares (the “bid” price) and the price at which they are willing to sell Shares (the “ask” price). Because of thecosts inherent in buying or selling Shares, frequent trading may detract significantly from investment results andan investment in Shares may not be advisable for investors who anticipate regularly making small investments.
Because of the Fund’s expenses a Share in the Fund will need to realize a return of 0.50% in a year for thevalue of a Share at the end of the year to equal the initial price of a Fund Share.
The Fund pays the Sponsor the Sponsor’s Fee, which accrues daily at an annualized rate of 0.33% of the NAV ofthe Fund payable monthly in arrears, and pays the Gold Delivery Provider the Gold Delivery Provider’s Fee,which accrues and is payable by the Fund daily at an annual rate of 0.17% of the NAV of the Fund. Accordingly,the Fund’s total annual expense ratio is expected to be equal to 0.50%. Based on the Fund’s total annual expenseratio of 0.50%, on an annualized basis the Fund will need to realize a return of 0.50% in the first year for thevalue of a share at the end of the first year to equal the initial selling price (not including any customarybrokerage commissions or other fees charged to intermediaries). For a hypothetical investment in a Share tobreak even 12 months after investment, assuming a selling price of $120.38, the investment would have togenerate a return of $0.60. See “Breakeven Analysis.”
The lack of an active trading market or a halt in trading of the Shares of the Fund may result in losses oninvestment at the time of disposition of the Shares.
Although the Shares are listed for trading on NYSE Arca, we cannot guarantee that an active trading market forthe Shares will develop. If an investor needs to sell Shares at a time when no active market for Shares exists, orthere is a halt in trading of securities generally or of the Shares, this will most likely adversely affect the price theinvestor receives for the Shares (assuming the investor is able to sell them).
The Shares may trade at a price that is at, above or below the NAV per Share and any discount orpremium in the trading price relative to the NAV per Share may widen as a result of non-concurrenttrading hours between the COMEX and NYSE Arca.
The Shares may trade at, above or below the NAV per Share. The NAV per Share fluctuates with changes in themarket value of the Fund’s assets. The trading price of the Shares fluctuates in accordance with changes in theNAV per Share as well as market supply and demand. The amount of the discount or premium in the tradingprice relative to the NAV per Share may be influenced by non-concurrent trading hours between the COMEXand NYSE Arca. While the Shares trade on NYSE Arca until 4:00 p.m. New York time, liquidity in the globalgold market may be reduced after the close of the COMEX at 1:30 PM New York time. As a result, after1:30 p.m. New York time, trading spreads, and the resulting premium or discount, on the Shares may widen.
However, because shares can be created and redeemed in Creation Units at NAV (unlike shares of manyclosed-end funds, which frequently trade at appreciable discounts from, and sometimes at premiums to, theirNAVs), the Sponsor believes that large discounts or premiums to the NAV of the Fund are not likely to besustained over the long term. While the creation/redemption feature is designed to make it more likely that theFund’s shares normally will trade on stock exchanges at prices close to the Fund’s next calculated NAV,exchange prices are not expected to correlate exactly with the Fund’s NAV due to timing reasons, supply anddemand imbalances and other factors. In addition, disruptions to creations and redemptions, including disruptionsat market makers or Authorized Participants, or to market participants or during periods of significant marketvolatility, may result in trading prices for shares of the Fund that differ significantly from its NAV.
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If the process of creation and redemption of Creation Units encounters any unanticipated difficulties, thepossibility for arbitrage transactions intended to keep the price of the shares closely linked to the price ofgold and the Reference Currencies comprising the FX Basket may not exist and, as a result, the price ofthe Shares may fall.
If the process for the creation and redemption of shares by Authorized Participants (which depends on, amongother things, timely transfers of Gold Bullion to and by the Custodian) encounter any unanticipated difficulties,potential market participants who would otherwise be willing to purchase or redeem Creation Units to takeadvantage of arbitrage opportunities may not do so. If this is the case, the liquidity of the Shares may decline andthe price of the Shares may fluctuate independently of the price of gold and may fall.
The amount of gold represented by each Share will decrease when the Fund’s Gold Bullion is sold to paythe Sponsor’s Fee and any other Fund expenses. Without increases in the price of gold and/or decreases inthe price of the FX Basket comprised of Reference Currencies sufficient to compensate for this decrease,the price of the Shares will decline and you will lose money on your investment in Shares.
To the extent the Fund sells Gold Bullion to cover expenses or liabilities, the amount of Gold Bullion representedby each Share will decrease. New deposits of Gold Bullion, received in exchange for new Shares issued by theFund, would not reverse this trend. A decrease in the amount of Gold Bullion represented by each Share resultsin a decrease in the price of a Share even if the price of Gold Bullion has not changed. To retain the Share’soriginal price, the price of gold would have to increase and/or the price of the FX Basket comprised of theReference Currencies would have to decrease. Without those beneficial price changes, the lesser amount of GoldBullion represented by the Share will have a correspondingly lower price. If these increases/decreases do notoccur, or are not sufficient to counter the lesser amount of Gold Bullion represented by each Share, you willsustain losses on your investment in Shares.
The Fund also may be subject to certain liabilities (for example, as a result of litigation) that have not beenassumed by the Sponsor. The Fund will sell Gold Bullion to pay those expenses, unless the Sponsor agrees to paysuch expenses out of its own pocket.
The value of the Shares could decline if unanticipated operational or trading problems arise.
There may be unanticipated problems or issues with respect to the mechanics of the Fund’s operations and thetrading of the Shares that could have a material adverse effect on an investment in the Shares. In addition, to theextent that unanticipated operational or trading problems or issues arise, the Sponsor’s past experience andqualifications may not be suitable for solving these problems or issues.
Market Disruption Events or Extraordinary Events could cause a disruption in the operation of the Indexand/or the Fund and in secondary market trading of Shares.
From time to time, unexpected events may cause the operations of the Index and/or the Fund to be disrupted.These events are expected to be relatively rare, though there can be no guarantee they will not occur. Theseevents are referred to as either “Market Disruption Events” or “Extraordinary Events” depending largely on theirsignificance and potential impact on the Index and the Fund. The occurrence of any Market Disruption Event orExtraordinary Event could have a material adverse impact on the Index, the Fund, the trading of Shares and thevalue of an investment in the Shares. Examples of Market Disruption Events or Extraordinary Events includedisruptions in the trading of gold or the Reference Currencies comprising the FX Basket, as well as delays ordisruptions in the publication of the LBMA Gold Price or the Reference Currency prices. The occurrence of aMarket Disruption Event or Extraordinary Event may result in, among other things, (i) a disruption or change inthe calculation of the Index or the Gold Delivery Amount, (ii) the suspension or cancellation of creation andredemption transactions and disruptions, and/or (iii) disruptions or halts in secondary market trading. MarketDisruption Events and Extraordinary Events could also cause secondary market trading of Shares to be disrupted
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or halted for short or even long periods of time. To the extent trading continues during a Market Disruption Eventor Extraordinary Event, it is expected that trading would be more volatile and that Shares would trade at widerdiscounts or premiums to NAV. The occurrence of any Market Disruption Event or Extraordinary Event couldhave a material adverse impact on the Index and/or Fund and the performance of the Index and/or Fund.
RISKS RELATING TO THE FUND’S OPERATIONS
RISKS RELATED TO THE FUND
The Fund is exposed to various operational risks.
The Fund is exposed to various operational risks, including human error, information technology failures andfailure to comply with formal procedures intended to mitigate these risks, and is particularly dependent onelectronic means of communicating, record-keeping and otherwise conducting business. In addition, the Fundgenerally exculpates, and in some cases indemnifies, its counterparties with respect to losses arising fromunforeseen circumstances and events, which may include the interruption, suspension or restriction of trading onor the closure of NYSE Arca, power or other mechanical or technological failures or interruptions, computerviruses, communications disruptions, work stoppages, natural disasters, fire, war, terrorism, riots, rebellions orother circumstances beyond its or its counterparties’ control. Accordingly, the Fund generally bears the risk ofloss with respect to these unforeseen circumstances and events to the extent relating to the Fund or the Shares.
Although it is expected that the Fund’s direct counterparties will generally have disaster recovery or similarprograms or safeguards in place to mitigate the effect of such unforeseen circumstances and events, thesesafeguards may not be in place for all parties whose activities may affect the performance of the Fund, and thesesafeguards, even if implemented, may not be successful in preventing losses associated with such unforeseencircumstances and events. Moreover, the systems and applications on which the Fund relies may not continue tooperate as intended. In addition to potentially causing performance failures at, or direct losses to, the Fund, anysuch unforeseen circumstances and events or operational failures may further distract the counterparties orpersonnel on which the Fund relies, reducing their ability to conduct the activities on which the Fund isdependent. These risks cannot be fully mitigated or prevented, and further efforts or expenditures to do so maynot be cost-effective, whether due to reduced benefits from implementing additional or redundant safeguards ordue to increases in associated maintenance requirements and other expenses that may make it more costly for theFund to operate in more typical circumstances.
The Fund may be required to terminate and liquidate at a time that is disadvantageous to Shareholders.
If the Fund is required to terminate and liquidate, such termination and liquidation could occur at a time that isdisadvantageous to Shareholders, such as when gold prices are lower than the gold prices at the time whenShareholders purchased their Shares. In such a case, when the Fund’s Gold Bullion is sold as part of the Fund’sliquidation, the resulting proceeds distributed to Shareholders will be fewer than if gold prices were higher at thetime of sale.
Redemption orders may be subject to rejection, suspension or postponement.
The Fund has the right, but not the obligation, to reject any Redemption Order if (i) the order is not in properform as described in the Participant Agreement, (ii) the fulfillment of the order, in the opinion of its counsel,might be unlawful, (iii) if the Fund determines that acceptance of the order from an Authorized Participant wouldexpose the Fund to credit risk, or (iv) circumstances outside the control of the Administrator, the Sponsor or theCustodian make the redemption, for all practical purposes, not feasible to process.
The Fund may, in its discretion, and will, when directed by the Sponsor, suspend the right of redemption, orpostpone the redemption settlement date: (1) for any period during which NYSE Arca is closed other thancustomary weekend or holiday closings, or trading on NYSE Arca is suspended or restricted, (2) for any period
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during which an emergency exists as a result of which delivery, disposal or evaluation of Gold Bullion is notreasonably practicable, or (3) for such other period as the Sponsor determines to be necessary for the protectionof the Shareholders.
The Sponsor will not be liable to any person or liable in any way for any loss or damages that may result fromany such rejection, suspension or postponement.
Loss of intellectual property rights related to the Fund, or competing claims over ownership of thoserights, could adversely affect the Fund and an investment in the Shares.
While the Sponsor believes that all intellectual property rights needed to operate the Fund are owned by orlicensed to the Sponsor or an affiliate or have been obtained, the Index Provider has the right to terminate theIndex License Agreement. If the Index License Agreement is terminated, the Sponsor would attempt to license areplacement index as soon as reasonably possible. On a temporary basis during such time, the Fund wouldeffectively be tracking the performance of the price of Gold Bullion in terms of U.S. dollars. No assurance can begiven that the Sponsor would be able to find an acceptable replacement index. Furthermore, third parties mayallege or assert ownership of intellectual property rights that may be related to the design, structure andoperations of the Fund. To the extent any claims of such ownership are brought or any proceedings are institutedto assert such claims, the negotiation, litigation or settlement of such claims, or the ultimate disposition of suchclaims in a court of law if a suit is brought, may adversely affect the Fund and an investment in the Shares, forexample, resulting in expenses or damages or the termination of the Fund.
RISKS RELATED TO THE SHARES
The Shares are a new securities product and their value could decrease if unanticipated operational ortrading problems arise.
The mechanisms and procedures governing the creation, redemption and offering of the Shares, as well asprocedures for transferring Gold Bullion into or out of the Fund pursuant to the Gold Delivery Agreement, havebeen developed specifically for this securities product. Consequently, there may be unanticipated problems orissues with respect to the mechanics of the Fund’s operations and the trading of the Shares that could have amaterial adverse effect on an investment in the Shares. In addition, although the Fund is not actively “managed”by traditional methods, to the extent that unanticipated operational or trading problems or issues arise, theSponsor’s past experience and qualifications may not be suitable for solving these problems or issues.
The liquidity of the Shares may be affected by the withdrawal of Authorized Participants and substantialredemptions by Authorized Participants.
In the event that one or more Authorized Participants that has substantial interests in the Shares withdraws fromparticipation, the liquidity of the Shares will likely decrease, which could adversely affect the market price of theShares. The liquidity of the Shares also may be affected by substantial redemptions by Authorized Participantsrelated to or independent of the withdrawal from participation of Authorized Participants. In the event that thereare substantial redemptions of Shares or one or more Authorized Participants with a substantial interest in theShares withdraws from participation, the liquidity of the Shares will likely decrease, which could adversely affectthe market price of the Shares and result in your incurring a loss on your investment.
Shareholders do not have the rights enjoyed by investors in certain other investment vehicles.
As interests in an investment trust, the Shares have none of the statutory rights normally associated with theownership of shares of a corporation (including, for example, the right to bring “oppression” or “derivative”actions). In addition, the Shares have limited voting and distribution rights (for example, shareholders do nothave the right to elect directors and will not receive dividends).
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RISKS RELATED TO GOLD
The Fund’s Gold Bullion may be subject to loss, damage, theft or restriction on access.
There is a risk that some or all of the Fund’s Gold Bullion bars held by the Custodian or any subcustodian onbehalf of the Fund could be lost, damaged or stolen. Access to the Fund’s Gold Bullion bars could also berestricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Any of theseevents may adversely affect the operations of the Fund and, consequently, an investment in the Shares.
The Fund may not have adequate sources of recovery if its Gold Bullion is lost, damaged, stolen ordestroyed and recovery may be limited, even in the event of fraud, to the market value of the gold at thetime the fraud is discovered.
Shareholders’ recourse against the Fund, the Administrator, the Trustee and the Sponsor under Delaware law, theCustodian under English law, and any subcustodians under the law governing their custody operations, is limited.The Fund does not insure its Gold Bullion. The Custodian has agreed to maintain insurance in support of itscustodial obligations under the Allocated Bullion Account Agreement, including covering any loss of gold, onsuch terms and conditions as it considers appropriate which does not cover the full amount of gold. TheCustodian will annually provide the Trust with a copy of the Custodian’s certificate of insurance. The Fund is nota beneficiary of any such insurance and does not have the ability to dictate the nature or amount of coverage.Therefore, Shareholders cannot be assured that the Custodian will maintain adequate insurance or any insurancewith respect to the Gold Bullion held by the Custodian on behalf of the Fund. In addition, the Custodian and theTrust do not require any subcustodians to be insured or bonded with respect to their custodial activities or withrespect to the Gold Bullion held by them on behalf of the Fund. Consequently, a loss may be suffered withrespect to the Fund’s Gold Bullion, which is not covered by insurance and for which no person is liable indamages.
The liability of the Custodian is limited under the Custody Agreements, the Allocated Bullion AccountAgreement, and the Unallocated Bullion Account Agreement. Under the Custody Agreements, the Custodian isresponsible only for any loss or damage suffered by the Fund arising out of the Custodian’s own negligence, badfaith, willful misfeasance, or reckless disregard of its duties. Under the Allocated Bullion Account Agreementand the Unallocated Bullion Account Agreement, the Custodian is responsible to the Fund only for any loss ordamage suffered by the Fund as a direct result of any negligence, fraud or willful default on the Custodian’s part.The Custodian’s liability under the Allocated Bullion Account Agreement and the Unallocated Bullion AccountAgreement is limited to the market value of the gold held in the Fund Allocated Account at the time theCustodian discovers such negligence, fraud or willful default, provided that the Custodian promptly notifies theAdministrator of its discovery.
In addition, the Custodian will not be liable for any delay in performance or any non-performance of any of itsobligations under the Custody Agreements by reason of any cause beyond its reasonable control, including actsof God, war or terrorism. As a result, the recourse of the Administrator or the investor, under English law, islimited. Furthermore, under English common law, the Custodian or any subcustodian will not be liable for anydelay in the performance or any non-performance of its custodial obligations by reason of any cause beyond itsreasonable control.
Gold Bullion bars may be held by one or more subcustodians appointed by the Custodian until it is transported tothe Custodian’s vault premises. Under the Allocated Bullion Account Agreement, except for an obligation on thepart of the Custodian to use commercially reasonable efforts to obtain delivery of the Fund’s Gold Bullion barsfrom any subcustodians appointed by the Custodian, the Custodian is not liable for the acts or omissions, or forthe solvency, of its subcustodians unless the selection of such subcustodians was made negligently or in badfaith. There are expected to be no written contractual arrangements between subcustodians that hold the Fund’sGold Bullion bars and the Trust or the Custodian, because traditionally such arrangements are based on theLBMA’s rules and on the customs and practices of the London bullion market. In the event of a legal dispute
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with respect to or arising from such arrangements, it may be difficult to define such customs and practices. TheLBMA’s rules may be subject to change outside the control of the Fund. Under English law, neither the Trust northe Custodian would have a supportable breach of contract claim against a subcustodian for losses relating to thesafekeeping of gold. If the Fund’s Gold Bullion bars are lost or damaged while in the custody of a subcustodian,the Fund has only limited rights, and depending on the circumstances, may have no right to recover damagesfrom the Custodian or the subcustodian.
The obligations of the Custodian under the Allocated Bullion Account Agreement, the Unallocated BullionAccount Agreement and the Participant Unallocated Bullion Account Agreement are governed by English law.The Custodian may enter into arrangements with English subcustodians, which arrangements may also begoverned by English law. The Trust is a Delaware statutory trust. Any United States, Delaware or other courtsituated in the United States may have difficulty interpreting English law (which, insofar as it relates to custodyarrangements, is largely derived from court rulings rather than statute), LBMA rules or the customs and practicesin the London custody market. It may be difficult or impossible for the Trust, on behalf of the Fund, to sue asubcustodian in a United States, Delaware or other court situated in the United States. In addition, it may bedifficult, time consuming and/or expensive for the Trust, on behalf of the Fund, to enforce in a foreign court ajudgment rendered by a United States, Delaware or other court situated in the United States.
If the Fund’s Gold Bullion bars are lost, damaged, stolen or destroyed under circumstances rendering a partyliable to the Fund, the responsible party may not have the financial resources sufficient to satisfy the Fund’sclaim. For example, as to a particular event of loss, the only source of recovery for the Fund might be limited tothe Custodian, as currently it is the sole custodian holding all of the Fund’s Gold Bullion; or one or moresubcustodians, if appointed; or, to the extent identifiable, other responsible third parties (e.g., a thief or terrorist),any of which may not have the financial resources (including liability insurance coverage) to satisfy a valid claimof the Fund.
Neither the Shareholders nor any Authorized Participant has a right under the Custody Agreements to assert aclaim of the Trust against the Custodian or any subcustodian; claims under the Custody Agreements may only beasserted by the Trust on behalf of the Fund.
Gold Bullion allocated to the Fund in connection with the creation of a Creation Unit may not meet theLondon Good Delivery Standards and, if a Creation Unit is issued against such Gold Bullion, the Fundmay suffer a loss.
Neither the Administrator nor the Custodian independently confirms the fineness of the gold allocated to theFund in connection with the creation of a Creation Unit. The Gold Bullion allocated to the Fund by the Custodianmay be different from the reported fineness or weight required by the LBMA’s standards for Gold Bullion barsdelivered in settlement of a gold trade (London Good Delivery Standards), which are the standards required bythe Fund. If the Administrator nevertheless issues a Creation Unit against such gold, and if the Custodian fails tosatisfy its obligation to credit the Fund the amount of any deficiency, the Fund may suffer a loss.
RISKS RELATED TO THE CUSTODIAN
The Fund relies on the Custodian for the safekeeping of essentially all of the Fund’s Gold Bullion. As aresult, failure by the Custodian to exercise due care in the safekeeping of the Fund’s Gold Bullion couldresult in a loss to the Fund.
The Fund relies on the Custodian for the safekeeping of essentially all of the Fund’s Gold Bullion. TheAdministrator is not liable for the acts or omissions of the Custodian. The Administrator has no obligation tomonitor the activities of the Custodian other than to receive and review reports prepared by the Custodianpursuant to the Custody Agreements. In addition, the ability to monitor the performance of the Custodian may belimited because under the Custody Agreements the Trust and the Sponsor and any accountants or other inspectors
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selected by the Sponsor have only limited rights to visit the premises of the Custodian for the purpose ofexamining the Fund’s Gold Bullion and certain related records maintained by the Custodian. As a result of theabove, any failure by the Custodian to exercise due care in the safekeeping of the Fund’s Gold Bullion may notbe detectable or controllable by the Administrator and could result in a loss to the Fund.
Failure by the subcustodians to exercise due care in the safekeeping of the Fund’s Gold Bullion bars couldresult in a loss to the Fund.
Under the Allocated Bullion Account Agreement, the Custodian agreed that it will hold all of the Fund’s GoldBullion bars in its own vault premises except when the Gold Bullion bars have been allocated in a vault otherthan the Custodian’s vault premises, and in such cases the Custodian agreed that it will use commerciallyreasonable efforts promptly to transport the Gold Bullion bars to the Custodian’s vault, at the Custodian’s costand risk. Nevertheless, there will be periods of time when some portion of the Fund’s Gold Bullion bars will beheld by one or more subcustodians appointed by the Custodian. The Allocated Bullion Account Agreement isdescribed in “Custody Agreements.”
The Custodian is required under the Allocated Bullion Account Agreement to use reasonable care in appointingits subcustodians and will monitor the conduct of each subcustodian, and promptly advise the Fund of anydifficulties or problems existing with respect to such subcustodian. However, the Gold Bullion held by asubcustodian is held in the name of the Custodian, and not in the name of the Fund, and the account with eachsubcustodian is only subject to the Custodian’s instructions. In the event a subcustodian fails to exercise due carein the safekeeping of the Fund’s Gold Bullion, there could be a resulting loss to the Fund, and the fund may havelimited or no ability to pursue any action against the subcustodian. See “Description of the Custody Agreements”for more information about subcustodians that may hold the Fund’s Gold Bullion.
The ability of the Administrator and the Custodian to take legal action against subcustodians may belimited, which increases the possibility that the Fund may suffer a loss if a subcustodian does not use duecare in the safekeeping of the Fund’s Gold Bullion bars.
If any subcustodian that holds Gold Bullion on a temporary basis does not exercise due care in the safekeeping ofthe Fund’s Gold Bullion bars, the ability of the Trust or the Custodian to recover damages against suchsubcustodian may be limited to only such recourse, if any, as may be available under applicable English law or, ifthe subcustodian is not located in England, under other applicable law. This is because there are expected to beno written contractual arrangements between subcustodians who may hold the Fund’s Gold Bullion bars and theTrust or the Custodian, as the case may be. If the Trust’s or the Custodian’s recourse against the subcustodian isso limited, the Fund may not be adequately compensated for the loss. For more information on the Trust’s andthe Custodian’s ability to seek recovery against subcustodians and the subcustodian’s duty to safekeep the Fund’sGold Bullion bars, see “Description of the Custody Agreements.”
Gold Bullion held in the Fund’s unallocated Gold Bullion account and any Authorized Participant’sunallocated Gold Bullion account is not segregated from the Custodian’s assets. If the Custodian becomesinsolvent, its assets may not be adequate to satisfy a claim by the Fund or any Authorized Participant. Inaddition, in the event of the Custodian’s insolvency, there may be a delay and costs incurred in identifyingthe Gold Bullion bars held in the Fund’s allocated Gold Bullion account.
Gold Bullion that is part of a deposit for a purchase order or part of a redemption distribution, or which istransferred into or out of the Fund pursuant to the Gold Delivery Agreement, is held for a time in the FundUnallocated Account and in the case of creations and redemptions, previously or subsequently, in the AuthorizedParticipant Unallocated Account of the purchasing or redeeming Authorized Participant. During those times, theFund and the Authorized Participant, as the case may be, will have no proprietary rights to any specific bars ofGold Bullion held by the Custodian and will each be an unsecured creditor of the Custodian with respect to theamount of Gold Bullion held in such unallocated accounts. In addition, if the Custodian fails to allocate the
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Fund’s Gold Bullion in a timely manner, in the proper amounts or otherwise in accordance with the terms of theUnallocated Bullion Account Agreement, or if a subcustodian fails to so segregate Gold Bullion held by it onbehalf of the Fund, unallocated Gold Bullion will not be segregated from the Custodian’s assets, and the Fundwill be an unsecured creditor of the Custodian with respect to the amount so held in the event of the insolvencyof the Custodian. In the event the Custodian becomes insolvent, the Custodian’s assets might not be adequate tosatisfy a claim by the Fund or the Authorized Participant for the amount of Gold Bullion held in their respectiveunallocated Gold Bullion accounts.
In the event of the insolvency of the Custodian, a liquidator may seek to freeze access to the Gold Bullion held inall of the accounts held by the Custodian, including the Fund Allocated Account. Although the Fund would retainlegal title to the allocated Gold Bullion bars, the Fund could incur expenses in connection with obtaining controlof the allocated Gold Bullion bars, and the assertion of a claim by such liquidator for unpaid fees due to theCustodian could delay creations and redemptions of Creation Units.
The lack of diversification of warehouse locations for the physical Gold Bullion held by the Custodiancould result in significant losses to the Fund if the Gold Bullion warehoused at such locations is lost,damaged, stolen or inaccessible.
Unless otherwise agreed between the Fund and the Custodian, custody of the Gold Bullion deposited with andheld for the account of the Fund is provided by the Custodian at its London, England vault or, when Gold Bullionhas been allocated in a vault other than the Custodian’s London vault premises, by or for any subcustodianemployed by the Custodian for the temporary custody and safekeeping of Gold Bullion until it can be transportedto the Custodian’s London vault premises. The lack of diversification of warehouse locations could result insignificant losses to the Fund if the Fund’s Gold Bullion bars held by the Custodian or any subcustodian onbehalf of the Fund at any single location are lost, damaged, or stolen. The lack of diversification of warehouselocations could also result in significant losses if the Gold Bullion warehoused at a single location becomesinaccessible for a substantial period of time due to natural events (such as an earthquake) or human actions (suchas a terrorist attack).
The Custodian is authorized to appoint from time to time one or more subcustodians to hold the Fund’s GoldBullion until it can be transported to the Custodian’s vault.
Resignation of the Custodian would likely lead to the termination of the Fund if no successor is appointed.
The Fund and the Custodian may each terminate any Custody Agreement. The Sponsor would likely terminateand liquidate the Fund if the Custody Agreements are terminated and no successor custodian is appointed by theSponsor. No assurance can be given that the Sponsor would be able to find an acceptable replacement custodian.
RISKS RELATED TO THE GOLD DELIVERY PROVIDER
The Fund has entered into an agreement with the Gold Delivery Provider pursuant to which the GoldDelivery Provider has agreed to deliver to and receive from the Fund specified amounts of Gold Bullionrelated to changes in the value of the Reference Currencies comprising the FX Basket against the USD asapplied to the Fund’s declared holdings of Gold Bullion. If the Gold Delivery Provider cannot perform itsobligations under the Gold Delivery Agreement, the operations of the Fund will be adversely affected.
Under the Gold Delivery Agreement with the Fund, the Gold Delivery Provider has agreed to deliver to (andreceive from) the Fund Gold Bullion in amounts intended to approximate the performance of the Fund’s holdingsof Gold Bullion as though they had been denominated in the Reference Currencies comprising the FX Basket.The Gold Delivery Provider does not have any obligation to take the needs of the Fund or its Shareholders intoaccount when calculating that amount of Gold Bullion to be delivered pursuant to the Gold Delivery Agreement.If the Gold Delivery Provider fails to deliver Gold Bullion pursuant to its obligations under the Gold Delivery
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Agreement, it would have an adverse effect on our operations. In this regard, the Fund is exposed to settlementrisk from the Gold Delivery Provider until the Gold Delivery Provider delivers the Gold Bullion to the Fund. TheSponsor expects that any delay in delivering Gold Bullion to the Fund by the Gold Delivery Provider would onlyoccur for up to two days, exposing the Fund to up to two days of currency movements. Under normalcircumstances the Sponsor anticipates this would have no more than a 1 or 2 percent impact on the price of theFund. Moreover, to the extent that the Gold Delivery Provider could not honor its obligations under the GoldDelivery Agreement, such as due to bankruptcy or default under the agreement, or if the Gold DeliveryAgreement is terminated, the Fund would need to find a new entity to act in the same capacity as the GoldDelivery Provider. If the Fund could not quickly find someone to act in that capacity, the operations of the Fundmay be adversely affected.
In the event of an uncured default by the Gold Delivery Provider, the Fund would (1) declare an event of defaultand terminate the Gold Delivery Agreement, (2) seek to enter into a new agreement with a new Gold DeliveryProvider, but (3) continue to operate as a physical gold ETF while the Fund used commercially reasonable effortsto enter into a new agreement within a reasonable timeframe determined by the Fund. As a result, during thisperiod, the value of the Shares would be based solely on the value of the Gold Bullion held by the Fund, lessexpenses of the Fund’s operations. In other words, Shareholders would continue to have an indirect investment inGold Bullion but without exposure to the Reference Currencies comprising the FX Basket. During this period,Shares would continue to trade on the Exchange and Authorized Participants would continue to deliver GoldBullion to or receive Gold Bullion from the Fund in connection with the purchase or redemption of CreationUnits. In short, if the Fund did not have a Gold Delivery Provider, it would perform like a standard physical goldETF.
The Gold Delivery Agreement may be terminated by either party after an initial term of two and a half years (the“Initial Term”). The Gold Delivery Agreement requires that, at least six months prior to the end of the InitialTerm, the parties attempt in good faith to agree to the terms and conditions of a new Gold Delivery Agreement orother agreement between the parties for the provision of services relating to the Fund. On September 11, 2018,the Trust and the Gold Delivery Provider entered into an amendment to the Gold Delivery Agreement thatextended the term of the Gold Delivery Agreement until June 2022. The Sponsor would likely terminate andliquidate the Fund if the Gold Delivery Agreement is terminated and the Sponsor is unable to appoint a successorGold delivery agent within a reasonable amount of time. No assurance can be given that the Sponsor would beable to find an acceptable replacement Gold delivery agent. Lastly, the Gold Delivery Provider could make errorsin calculating the amount of Gold Bullion to be delivered to and received from the Fund. If the Gold DeliveryAmount does not accurately approximate the performance of the Fund’s holdings of Gold Bullion as though theyhad been denominated in the Reference Currencies, the Fund may be adversely affected.
RISKS RELATED TO THE SERVICE PROVIDERS
The service providers engaged by the Fund may not carry adequate insurance to cover claims againstthem by the Fund, which could adversely affect the value of net assets of the Fund.
The Administrator, the Custodian, the Gold Delivery Provider and other service providers engaged by the Fundmaintain such insurance as they deem adequate with respect to their respective businesses. Investors cannot beassured that any of the aforementioned parties will maintain any insurance with respect to the Fund’s assets heldor the services that such parties provide to the Fund and, if they maintain insurance, that such insurance issufficient to satisfy any losses incurred by them in respect of their relationship with the Fund. Accordingly, theFund will have to rely on the efforts of the service provider to recover from their insurer compensation for anylosses incurred by the Fund in connection with such arrangements.
The Fund’s obligation to indemnify certain of its service providers could adversely affect an investment inthe Shares.
The Fund has agreed to indemnify certain of its service providers, including the Custodian, the Gold DeliveryProvider, the Sponsor and the Trustee, for certain liabilities incurred by such parties in connection with their
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respective agreements to provide services for the Fund. In the event the Fund is required to indemnify any of itsservice providers, the Fund may be required to sell Gold Bullion to cover such expenses and the Fund’s NAVwould be reduced accordingly, thus adversely affecting an investment in the Shares.
There are conflicts of interest among the Custodian, the Gold Delivery Provider, the Index Provider andtheir affiliates and the Fund.
HSBC Bank plc and its affiliates play a variety of roles in connection with the Fund. HSBC Bank plc, theCustodian, is responsible for the safekeeping of the Gold Bullion held by the Fund and receives a fee from theSponsor for doing so. The Custodian is also a direct participant in establishing the LBMA Gold Price AM.
In addition, the Fund delivers Gold Bullion to, or receives Gold Bullion from, Merrill Lynch International, theGold Delivery Provider, each Business Day on which the delivery of Gold Bullion can be settled based oncalculations made by the Gold Delivery Provider. The Gold Delivery Provider may exercise discretion incalculating the Gold Delivery Amount upon the occurrence of Market Disruption Events or ExtraordinaryEvents. Furthermore, the Index is maintained and calculated by Solactive AG and Solactive AG has licensed tothe Sponsor an exclusive right to use the Index and associated marks in connection with the Fund and inaccordance with the terms of the Index License Agreement.
The Custodian, the Gold Delivery Provider and their affiliates, in the course of their business, trade gold and theReference Currencies and instruments the value of which is derived from gold or the Reference Currencies on aregular basis (taking long or short positions or both), for their accounts, for other accounts under theirmanagement and to facilitate transactions on behalf of customers. In particular, the Custodian, the Gold DeliveryProvider and their affiliates are collectively among the largest participants, in terms of market share, in the spotmarket for gold and the spot and forward markets for the Reference Currencies.
Upon the resignation of the Custodian or the Gold Delivery Provider or upon the termination of the IndexLicense Agreement between the Sponsor and the Index Provider, the Sponsor would likely terminate andliquidate the Fund if a replacement cannot be found within a commercially reasonably amount of time. See“— Risks Relating to the Fund’s Operations — Risks Related to the Custodian — Resignation of the Custodianwould likely lead to the termination of the Fund if no successor is appointed,” “— Risks Related to the Fund’sOperations — Risks Relating to the Gold Delivery Provider” and “— Risks Related to the Fund’s Operations —Risks Relating to the Fund — Loss of intellectual property rights related to the Fund, or competing claims overownership of those rights, could adversely affect the Fund and an investment in the Shares.” No assurance can begiven that the Sponsor would be able to find an acceptable replacement.
As a result of the foregoing, there are conflicts of interest among the Custodian, the Gold Delivery Provider, theIndex Provider and their affiliates, on the one hand, and the Fund and its Shareholders, on the other hand. As aresult of these conflicts, the Custodian, the Gold Delivery Provider, the Index Provider and their affiliates mayfavor their own interests and the interests of their affiliates over the Fund and its Shareholders.
Potential conflicts of interest may arise among the Sponsor or its affiliates and the Fund.
The Sponsor will manage the business and affairs of the Fund. Conflicts of interest may arise among the Sponsorand its affiliates, on the one hand, and the Fund and its Shareholders, on the other hand. As a result of theseconflicts, the Sponsor may favor its own interests and the interests of its affiliates over the Fund and itsShareholders. These potential conflicts include, among others, the following:
• The Trust on behalf of the Fund, has agreed to indemnify the Sponsor and its affiliates pursuant to the termsof the Declaration of Trust;
• The Sponsor, its affiliates and their officers and employees are not prohibited from engaging in otherbusinesses or activities, including those that might be in direct competition with the Fund; and
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• The Sponsor decides whether to retain separate counsel, accountants or others to perform services for theFund.
REGULATORY RISKS
Shareholders do not have the protections associated with ownership of shares in an investment companyregistered under the Investment Company Act of 1940.
The Fund is not registered as an investment company under the Investment Company Act of 1940 and is notrequired to register under such Act. Consequently, Shareholders do not have the regulatory protections providedto investors in investment companies.
The Gold Bullion custody operations of the Custodian are not subject to specific governmental regulatorysupervision.
The Custodian is responsible for the safekeeping of the Fund’s Gold Bullion and also facilitates the transfer ofGold Bullion into and out of the Fund. Although the Custodian is a market maker, clearer and approved weigherunder the rules of the LBMA (which sets out good practices for participants in the bullion market), the LBMA isnot an official or governmental regulatory body. Furthermore, although the Custodian is subject to supervision bythe Board of Governors of the Federal Reserve System, and is generally regulated in the UK by the FinancialConduct Authority, such regulations do not directly cover the Custodian’s Gold Bullion custody operations in theUK. Accordingly, the Fund is dependent on the Custodian to comply with the best practices of the LBMA and toimplement satisfactory internal controls for its Gold Bullion custody operations to keep the Fund’s Gold Bullionsecure.
NYSE Arca may halt trading in the Shares, which would adversely affect your ability to sell your Shares.
The Shares are listed for trading on NYSE Arca under the symbol “GLDW.” Trading in the Shares may be halteddue to market conditions or for other reasons. For example, trading of the Shares may be halted by NYSE Arca inaccordance with NYSE Arca rules and procedures, for reasons that, in the view of NYSE Arca, make trading inthe Shares inadvisable. Trading may also be halted by NYSE Arca in the event certain information about theIndex, the value of the Shares or the NAV is not made available as required by such rules and procedures.
In addition, shares of the Fund may trade in the secondary market at times when the Fund does not accept ordersto purchase or redeem shares. At such times, shares may trade in the secondary market with more significantpremiums or discounts than might be experienced at times when the Fund accepts purchase and redemptionorders.
Also, trading generally on NYSE Arca is subject to trading halts caused by extraordinary market volatilitypursuant to “circuit breaker” rules that require trading to be halted for a specified period based on a specifiedmarket decline. There can be no assurance that the requirements necessary to maintain the listing of the Shareswill continue to be met or will remain unchanged. The Fund will be dissolved if the Shares are delisted fromNYSE Arca and are not approved for listing on another national securities exchange within five Business Days oftheir delisting.
The Trust is an emerging growth company subject to reduced public company reporting requirements.
The Trust is an “emerging growth company” as defined in the JOBS Act. The Trust has not elected to make useof the extended transition period for complying with new or revised accounting standards pursuant toSection 107(b) of the JOBS Act, which election is irrevocable. However, for so long as the Trust remains anemerging growth company, it will be subject to reduced public company reporting requirements. Among otherthings, emerging growth companies are exempt from the auditor attestation requirements under Section 404(b) of
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the Sarbanes-Oxley Act and certain “say on pay” provisions of the Dodd-Frank Act, and are subject to reduceddisclosure requirements relating to executive compensation and audited financial statements. The Trust may takeadvantage of the exemptions and scaled requirements applicable to emerging growth companies.
TAX RISKS
If a U.S. investor who or that is an individual, estate or trust (each referred to in this paragraph and thenext paragraph as an “individual”) sells or exchanges shares held for more than a year, any gainrecognized on the sale or exchange generally will be subject to federal income tax at a maximum rate of28% rather than the lower maximum rates applicable to most other long-term capital gains an individualrecognizes.
Gains recognized by an individual from the sale of “collectibles,” which term includes gold, held for more thanone year are subject to federal income tax at a maximum rate of 28% rather than the lower maximum ratesapplicable to most other long-term capital gains individuals recognize (currently a maximum of 20% forindividuals). For these purposes, gain an individual recognizes on the sale of an interest in a “grantor trust” thatholds collectibles (such as the Trust) is treated as gain recognized on the sale of the collectibles, to the extent thegain is attributable to unrealized appreciation in value of the collectibles. Therefore, any gain recognized by anindividual U.S. investor attributable to a sale or exchange of shares held for more than one year, or attributable tothe Fund’s sale of any gold that the investor is treated (through its ownership of shares) as having held for morethan one year, generally will be subject to federal income tax at a maximum rate of 28%. The tax rates for capitalgains recognized on the sale of assets held by an individual U.S. investor for one year or less, or by a taxpayerother than an individual, are generally the same as those at which ordinary income is taxed.
Gold delivered in and out of the Fund pursuant to the Gold Delivery Agreement will have taxconsequences to investors.
As a grantor trust, investors in the Fund will be treated as if they directly received their respective pro rata shareof the Fund’s income, which will include income received as a result of the delivery by the Gold DeliveryProvider of Gold Bullion to the Fund under the Gold Delivery Agreement. The character of this income will bedetermined on the basis of the particular circumstances of each investor. Each investor will receive an increase inits tax basis for its pro rata share of the fair market value of Gold Bullion received by the Fund from the GoldDelivery Provider. The payment by the Fund to the Gold Delivery Provider under the Gold Delivery Agreementwill be treated as the disposition of Gold Bullion in the amount of such payment and may result in gain or loss tosuch investors. For further discussion and special rules which may affect non-U.S. Investors, see the discussion atUnited States Federal Tax Consequences below.
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Use of Proceeds
Proceeds received by the Fund from the issuance and sale of Creation Units will consist of Gold Bullion deposits.During the life of the Fund, such proceeds will only be (1) held by the Fund, (2) transferred to or from the GoldDelivery Provider pursuant to the Gold Delivery Agreement, (3) disbursed or sold as needed to pay the Fund’songoing expenses and (4) distributed to Authorized Participants in connection with the redemption of CreationUnits. See the section “Description of Key Service Providers — The Gold Delivery Provider and the GoldDelivery Agreement” for more details.
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Performance of GLDW
PERFORMANCE OF SPDR® Long Dollar Gold Trust (TICKER: GLDW)
Name of Pool: SPDR® Long Dollar Gold TrustType of Pool: Public, Exchange-Listed Commodity Pool
Inception of Trading: January 30, 2017Aggregate Gross Capital Subscriptions as of September 30, 20181: $42,122,193
NAV as of September 30, 20182: $26,310,183NAV per Share as of September 30, 20183: $114.39
Worst Monthly Drawdown4: (3.21)% June 2017Worst Peak-to-Valley Drawdown5: (9.08)% February 2017 — September 2018
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.See accompanying Footnotes to Performance Information below.
Footnotes to Performance Information
1. “Aggregate Gross Capital Subscriptions” is the aggregate of all amounts ever contributed to the pool,including amounts that investors subsequently redeemed.
2. “NAV” is the NAV of the pool as of September 30, 2018.3. “NAV per Share” is the NAV of the pool divided by the total number of Shares outstanding as of
September 30, 2018.4. “Worst Monthly Drawdown” is the largest single month loss sustained during the most recent five calendar
years and year to date (if applicable). “Drawdown” as used in this section of the Prospectus means lossesexperienced by the relevant pool over the specified period and is calculated on a rate of return basis, i.e.,dividing net performance by beginning equity. “Drawdown” is measured on the basis of monthly returnsonly, and does not reflect intra-month figures. “Month” is the month of the Worst Monthly Drawdown.
5. “Worst Peak-to-Valley Drawdown” is the largest percentage decline in the NAV per Share during the mostrecent five calendar years (and to the extent applicable, for a period beyond the most recent five calendaryears if the starting date of the peak value extends beyond this period). This need not be a continuousdecline, but can be a series of positive and negative returns where the negative returns are larger than thepositive returns. “Worst Peak-to-Valley Drawdown” represents the greatest percentage decline from anymonth-end NAV per Share that occurs without such month-end NAV per Share being equaled or exceededas of a subsequent month-end. For example, if the NAV per Share of a particular pool declined by $1 ineach of January and February, increased by $1 in March and declined again by $2 in April, a“peak-to-valley drawdown” analysis conducted as of the end of April would consider that “drawdown” to bestill continuing and to be $3 in amount, whereas if the NAV per Share had increased by $2 in March, theJanuary-February drawdown would have ended as of the end of February at the $2 level.
6. “Compound Rate of Return” of the relevant pool is calculated by multiplying on a compound basis of eachof the monthly rates of return set forth in the respective charts above and not by adding or averaging suchmonthly rates of returns. For periods of less than one year, the results are year-to-date.
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Overview of the Gold Industry
THE MARKET FOR GOLD
As the market for gold and movements in the price of gold are expected to directly affect the price of the Shares,investors should have some understanding of gold markets and historical gold prices. Of course, investors shouldalso be aware that prior market conditions and historical movements in the price of gold are not indicators offuture market conditions or future gold prices.
The following chart provides historical background on the price of gold. The chart illustrates movements in theprice of gold in USDs per ounce over the period from January 1, 2007 to September 30, 2018. The price of goldin the chart is based on the London PM Gold Fix and the LBMA Gold Price PM. The LBMA Gold Price replacedthe previously established London Gold Fix on March 20, 2015. The chart would have shown substantiallysimilar results if the price of gold in the chart was based on the London Gold AM Fix and the LBMA Gold PriceAM, respectively.
Daily gold price (USD/oz) from 1/1/2007 to 9/30/2018*
US$/oz2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
02007 2008 2009 2010 2011 2012
Gold (US$/oz)20142013 2015 2016 2017 2018
*Gold (US$/oz) based on the LBMA Gold Price PM.Source: Bloomberg, ICE Benchmark Administration, World Gold Council
GOLD SUPPLY AND DEMAND
Gold is a physical asset that is accumulated rather than consumed. As a result, virtually all the gold that has everbeen mined still exists today in one form or another. Gold Focus 2018, published by Metals Focus estimates thatexisting above-ground stocks of gold amounted to in excess 187,000 tonnes (approximately 6 billion ounces) atthe end of 2017.1
1 Gold Focus 2018 is published by Metals Focus, Ltd. which is a precious metals research consultancy based inLondon. Metals Focus Data Ltd., an affiliate of the Sponsor, provides the supply and demand data to MetalsFocus, Ltd. When used in this Prospectus, “tonne” refers to one metric ton, which is equivalent to 1,000kilograms or 32,151 troy ounces.
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The following table sets forth a summary of the world gold supply and demand for the last 5 years. It is based oninformation reported in the Gold Focus 2018.
Based on data from Gold Focus 2018, gold supply averaged 4,439 tonnes (t) per year between 2013 and 2017.Sources of gold supply include both mine production and recycled above-ground stocks and, to a lesser extent,producer net hedging. The largest portion of gold supplied to the market is from mine production, whichaveraged approximately 3,202t per year from 2013 through 2017. The second largest source of annual goldsupply is recycling gold, which is gold that has been recovered from jewelry and other fabricated products andconverted back into marketable gold. Recycled gold averaged approximately 1,207t annually between 2013through 2017.
SOURCES OF GOLD DEMAND
Based on data from Gold Focus 2018, gold demand averaged 4,426t per year between 2013 and 2017. Golddemand generally comes from four sources: jewelry, industry (including medical applications), investment andthe official sector (including central banks and supranational organizations). The largest source of demand comesfrom jewelry fabrication, which accounted for approximately 54% of the identifiable demand from 2013 through2017 followed by net physical investment, which represents identifiable investment demand, which accounted forapproximately 27%.
Gold demand is widely dispersed throughout the world with significant contributions from India and China. Inmany countries there are seasonal fluctuations in the levels of demand for gold — especially jewelry. However,as a result of variations in the timing of seasons throughout the world, seasonal fluctuations in demand do notappear to have a significant impact on the global gold price.
Between 2013 and 2017, according to Gold Focus 2018, central bank purchases averaged 514t. The prominencegiven by market commentators to this activity coupled with the total amount of gold held by the official sectorhas resulted in this area being one of the more visible shifts in the gold market.
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OPERATION OF THE GOLD BULLION MARKET
The global trade in gold consists of OTC transactions in spot, forwards, and options and other derivatives,together with exchange-traded futures and options.
GLOBAL OVER-THE-COUNTER MARKET FOR GOLD
The OTC market trades on a continuous basis and accounts for most global gold trading. Market makers andparticipants in the OTC market trade with each other and their clients on a principal-to-principal basis. All risks andissues of credit are between the parties directly involved in the transaction. The three products relevant to LBMAmarket making are Spot (S), Forwards (F) and Options (O)(4).2 There are thirteen LBMA Market Makers whoprovide the service in one, two or all three products. Of the thirteen LBMA Market Makers, there are five FullMarket Makers and eight Market Makers. The five Full Market Makers quoting prices in all three products areCitibank N.A., Goldman Sachs International, HSBC, JP Morgan Chase Bank and UBS AG. The eight LBMAMarket Makers who provide two-way pricing in either one or two products are ICBC Standard Bank (S), MerrillLynch International Plc (S, O), Morgan Stanley & Co International (S, O), Societe Generale (S), Standard CharteredBank (S, O), Bank of Nova Scotia-ScotiaMocatta (S, F), Toronto-Dominion Bank (F) and BNP Paribas SA (F).
The OTC market provides a relatively flexible market in term of quotes, price, size, destinations for delivery andother factors. Bullion dealers customize transactions to meet their clients’ requirements. The OTC market has noformal structure and no open-outcry meeting place.
The main centers of the OTC market are London, New York and Zurich. Mining companies, central banks,manufacturers of jewelry and industrial products, together with investors and speculators, tend to transact theirbusiness through one of these centers. Centers such as Dubai and several cities in the Far East also transactsubstantial OTC market business. Bullion dealers have offices around the world and most of the world’s majorbullion dealers are either members or associate members of the LBMA.
In the OTC market, the standard size of gold trades ranges between 5,000 and 10,000 ounces. Bid-offer spreadsare typically $0.50 per ounce. Transaction costs in the OTC market are negotiable between the parties andtherefore vary widely, with some dealers willing to offer clients competitive prices for larger volumes, althoughthis will vary according to the dealer, the client and market conditions. Cost indicators can be obtained fromvarious information service providers as well as dealers.
Liquidity in the OTC market can vary from time to time during the course of the 24-hour trading day.Fluctuations in liquidity are reflected in adjustments to dealing spreads — the difference between a dealer’s“buy” and “sell” prices. The period of greatest liquidity in the gold market generally occurs at the time of daywhen trading in the European time zones overlaps with trading in the United States, which is when OTC markettrading in London, New York and other centers coincides with futures and options trading on the CommodityExchange Inc. (the “COMEX”).
THE LONDON GOLD BULLION MARKET
Although the market for physical gold is global, most OTC market trades are cleared through London. In additionto coordinating market activities, the LBMA acts as the principal point of contact between the market and itsregulators. A primary function of the LBMA is its involvement in the promotion of refining standards bymaintenance of the “London Good Delivery Lists,” which are the lists of LBMA accredited melters and assayersof gold. The LBMA also coordinates market clearing and vaulting, promotes good trading practices and developsstandard documentation.
The term “loco London” refers to gold bars physically held in London that meet the specifications for weight,dimensions, fineness (or purity), identifying marks (including the assay stamp of an LBMA acceptable refiner)
2 http://www.lbma.org.uk/membership.
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and appearance set forth in “The Good Delivery Rules for Gold and Silver Bars” published by the LBMA. Goldbars meeting these requirements are known as “London Good Delivery Bars.” All of the Gold Bullion will beLondon Good Delivery Bars meeting the requirements of London Good Delivery Standards.
The unit of trade in London is the troy ounce, whose conversion between grams is: 1,000 grams = 32.1507465 troyounces and 1 troy ounce = 31.1034768 grams. A London Good Delivery Bar is acceptable for delivery in settlementof a transaction on the OTC market. Typically referred to as 400-ounce bars, a London Good Delivery Bar mustcontain between 350 and 430 fine troy ounces of gold, with a minimum fineness (or purity) of 995 parts per 1,000(99.5%), be of good appearance and be easy to handle and stack. The fine gold content of a gold bar is calculated bymultiplying the gross weight of the bar (expressed in units of 0.025 troy ounces) by the fineness of the bar.
THE LBMA GOLD PRICE
The LBMA Gold Price is determined twice each Business Day (10:30 a.m. and 3:00 p.m. London time) throughan auction which provides reference gold prices for that day’s trading. The LBMA Gold Price was initiated onMarch 20, 2015 and replaced the London Gold Fix. The auction that determines the LBMA Gold Price is aphysically settled, electronic and tradeable auction, with the ability to settle trades in U.S. dollars, euros orBritish pounds. The IBA provides the auction platform and methodology as well as the overall administration andgovernance for the LBMA Gold Price. Many long-term contracts are expected to be priced on the basis of eitherthe morning (AM) or afternoon (PM) LBMA Gold Price, and many market participants are expected to refer toone or the other of these prices when looking for a basis for valuations.
Participants in the IBA auction process submit anonymous bids and offers which are published on screen and inreal-time. Throughout the auction process, aggregated gold bids and offers are updated in real-time with theimbalance calculated and the price updated every 45 seconds until the buy and sell orders are matched. When thenet volume of all participants falls within a pre-determined tolerance, the auction is deemed complete and theapplicable LBMA Gold Price is published. Information about the auction process (such as aggregated bid andoffer volumes) will be immediately available after the auction on the IBA’s website.
The Financial Conduct Authority, or FCA, in the U.K. regulates the LBMA Gold Price.
FUTURES EXCHANGES
Although the Fund will not invest in gold futures, information about the gold futures market is relevant as suchmarkets are a source of liquidity for the overall market for gold and affect the price of gold.
The most significant gold futures exchange is COMEX, part of the CME Group. It began to offer trading in goldfutures contracts in 1974 and for most of the period since that date, it has been the largest exchange in the worldfor trading precious metals futures and options. TOCOM (“Tokyo Commodity Exchange”) is another significantfutures exchange and has been trading gold since 1982. Trading on these exchanges is based on fixed deliverydates and transaction sizes for the futures and options contracts traded. Trading costs are negotiable. As a matterof practice, only a small percentage of the futures market turnover ever comes to physical delivery of the goldrepresented by the contracts traded. Both exchanges permit trading on margin. Margin trading can add to thespeculative risk involved given the potential for margin calls if the price moves against the contract holder. BothCOMEX and TOCOM operate through a central clearance system and in each case, the exchange acts as acounterparty for each member for clearing purposes.
Over recent years China has become an important source of gold demand and its futures markets have grown.Gold futures contracts are traded on the Shanghai Gold Exchange and the Shanghai Futures Exchange.
MARKET REGULATION
The global gold markets are overseen and regulated by both governmental and self-regulatory organizations. Inaddition, certain trade associations have established rules and protocols for market practices and participants.
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Overview of the Foreign Exchange Markets
The foreign exchange market (“FX Market”), in which traders are able to buy, sell, exchange, and speculate oncurrencies, is one of the world’s largest, most liquid and most actively traded financial markets. According to theBank for International Settlements (“BIS”) Triennial Central Bank Survey 2016, trading in global foreignexchange markets averaged $5.1 trillion per day in April 2016.
Currencies in the FX Market are traded in pairs and the transacted rate represents the rate to exchange onecurrency for another currency. The USD is the dominant currency in the FX Market. The exchange of the USDfor another currency accounts for an estimated 88% of global FX Market activity. The most actively tradedcurrency pairs are the Euro/USD (EUR/USD), USD/Japanese Yen (USD/YEN), and British Pound Sterling/USD(GBP/USD). Participants in the FX Market include banks, investment firms, commercial companies, centralbanks, hedge funds, and retail customers.
There are three major kinds of transactions in the traditional foreign exchange markets: spot transactions,forwards and foreign exchange swaps. “Spot” trades are foreign exchange transactions that settle with physicaldelivery of a currency typically within two Business Days with the counterparty to the trade. “Forward” tradesare transactions that settle on a date beyond spot, and can be either deliverable forwards, which require thedelivery of the currency at the settlement of the transaction, or non-deliverable forwards which are not settled byphysical delivery of the foreign currency, but rather through cash settlement. “Swap” transactions aretransactions in which two parties exchange principal and interest in one currency for the principal and interest ofanother currency on one or more specified dates over an agreed period. There also are transactions in currencyoptions, which trade both over-the-counter and, in the United States, on certain national securities exchanges,such as the Philadelphia Stock Exchange and the Chicago Board Options Exchange. Foreign exchange forward,swap and option transactions are subject to the jurisdiction of the CFTC and are regulated as swaps, other thancurrency options that are traded on the Philadelphia Stock Exchange, which are regulated as securities by theSEC. Currency futures are transactions in which an institution buys or sells a standardized amount of foreigncurrency on an organized exchange for delivery on one of several specified dates. Currency futures are traded ina number of regulated markets, including the International Monetary Market division of the Chicago MercantileExchange, the Singapore Exchange Derivatives Trading Limited (formerly the Singapore International MonetaryExchange (“SIMEX”)) and the London International Financial Futures Exchange (“LIFFE”).
Participants in the foreign exchange market have various reasons for participating. Multinational corporationsand importers need foreign currency to acquire materials or goods from abroad. Banks and multinationalcorporations sometimes require specific wholesale funding for their commercial loan or other foreign investmentportfolios. Some participants hedge open currency exposure through off-balance-sheet products.
The primary market participants in foreign exchange are banks (including government-controlled central banks),investment banks, money managers, multinational corporations and institutional investors. The most significantparticipants are the major international commercial banks that act both as brokers and as dealers. In their dealerrole, these banks maintain long or short positions in a currency and seek to profit from changes in exchange rates.In their broker role, the banks handle buy and sell orders from commercial customers, such as multinationalcorporations. The banks earn commissions when acting as agent. They profit from the spread between the rates atwhich they buy and sell currency for customers when they act as principal.
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Objective of the Fund
OVERVIEW
The Fund has been established as an alternative to traditional dollar-based gold investing. Although investorspurchase shares of the Fund with USDs or, in the case of Authorized Participants, through the contribution ofGold Bullion, the Fund is designed to provide investors with the economic effect of holding gold in terms of theReference Currencies, rather than the USD. Specifically, the investment objective of the Fund is to track theperformance of the Solactive GLD® Long USD Gold Index, less Fund expenses. The Solactive GLD® Long USDGold Index, or the “Index,” represents the daily performance of a long position in physical gold and a shortposition in the FX Basket comprised of the Reference Currencies as weighted in the Index (i.e., a long USDexposure versus the FX Basket). The Index is designed to measure daily gold returns as though an investor hadinvested in gold in terms of the FX Basket comprised of the Reference Currencies. In general, the USD value ofan investment in the Fund would therefore be expected to increase when both the price of gold goes up and thevalue of the USD increases against the value of the Reference Currencies comprising the FX Basket (as weightedin the Index). Conversely, the USD value of an investment, in general, would be expected to decrease when theprice of gold goes down and the value of the USD decreases against the value of the Reference Currenciescomprising the FX Basket (as weighted in the Index). If the price of gold increases and the value of the USDdecreases against the value of the Reference Currencies comprising the FX Basket, or vice versa, the net impactof these changes will determine the value of the Fund on a daily basis.
The Fund is a passive investment vehicle and is designed to track the performance of the Index regardless of(i) the value of gold or any Reference Currency; (ii) market conditions; and (iii) whether the Index is increasingor decreasing in value. The Fund’s holdings generally consist entirely of Gold Bullion. Substantially all of theFund’s Gold Bullion holdings are delivered by Authorized Participants (defined below) in exchange for FundShares. The Fund does not hold any of the Reference Currencies. The Fund generally does not hold USDs(except from time to time in very limited amounts to pay expenses). The Fund’s Gold Bullion holdings are notmanaged and the Fund does not have any investment discretion.
THE CASE FOR INVESTING IN GOLD REFERENCED IN NON-U.S. CURRENCIES
Gold has unique properties as an asset class. Gold can be used in portfolios to help protect global purchasingpower, reduce portfolio volatility and minimize losses during periods of market shock. It has historically beenperceived as a high-quality liquid asset to be used when selling other assets would cause losses. Investors havetraditionally made use of gold’s lack of correlation with other assets to diversify their portfolios and hedgeagainst stock market, bond, currency and other risks.
Gold’s ability to serve as a potential portfolio diversifier is due to its historically low-to-negative correlation withstocks and bonds. The economic forces that determine the price of gold are different from the forces thatdetermine the prices of most financial assets. For example, the price of a stock often depends on the earnings orgrowth potential of the issuing company or the confidence investors have in its management. The price of a bonddepends primarily on its credit rating, its yield and the yields of competing fixed income investments. The priceof gold, however, depends on different factors, including the supply and demand for gold, the strength orweakness of the USD, the rate of inflation and interest rates and the political environment. Gold does not dependon a promise to pay on the part of any government or corporation, as is the case with investments in moneymarket instruments as well as in the corporate and government bond markets. Gold cannot be repudiated, as isthe case with paper assets. Gold is not subject to the risk of default or bankruptcy. Gold cannot be created at willas can paper-backed assets.
Some of gold’s investment attributes are shared with traditional portfolio diversifiers, which include non-U.S.equities, emerging markets securities, real estate investment trusts, and domestic and foreign bonds. However,gold historically has had little correlation with these traditional diversifiers and low-to-negative correlation with
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the Standard & Poor’s 500 Index, which is widely regarded as the standard for measuring the stock marketperformance of large capitalized U.S. companies. In the search for effective diversification, investors have begunto turn to a variety of non-traditional diversifiers. These non-traditional diversifiers include hedge and privateequity funds, commodities, timber and forestry, fine art and collectibles. Gold has historically been perceived ashaving one or more of the following advantages over each of these non-traditional diversifiers: greater liquidity,lower risk and lower management and holding costs.
An investment in the Shares may amplify gold’s portfolio diversification effect because of the potential impact ofthe Reference Currencies on the value of the Shares. In periods of stock market stress, investors have tended toseek safety in USD-denominated assets, which has tended to increase the value of the USD. Thus, during periodsof stock market stress, gold purchased with USDs has tended to act as a portfolio diversifier, but gold purchasedwith foreign currencies has tended to provide even better diversification because investors were able to hold ontotheir appreciating USDs. Although investors purchase the Shares with USDs, the Gold Delivery Agreement isdesigned to provide investors with the economic effect of holding gold in terms of the Reference Currenciesrather than in terms of USDs. Accordingly, the Fund is designed to provide investors with greater portfoliodiversification than holding gold in USD terms only. Of course, there can be no guarantee that the Fund will meetthis objective.
An investment in the Shares will perform better when the USD is strengthening than would an investment inGold in USD terms. Accordingly, when the USD is strengthening, an investment in the Shares may allowinvestors to add gold’s portfolio diversification effect to their portfolios in a more effective way than aninvestment in gold in USD terms.
For example, during periods of stock market stress, based on historical data over the last 10 years, had the Indexbeen in existence, it would have outperformed gold in USD terms and therefore helped to better diversify aninvestor’s portfolio during this period. For example, from December 31, 2007 to March 31, 2009, which roughlycovers a period of significant losses in the stock market, gold in USD terms rose approximately 9.9% whereas theIndex rose approximately 22.5%. Conversely, during periods where the stock market performed relatively well,gold in USD terms has tended to outperform the Index. Although many factors can drive the performance of bothgold and the Reference Currencies comprising the FX Basket, the Index has tended to outperform gold in USDterms during periods of stock market stress because during those periods investors have tended to engage in aflight to quality and invest in both gold and USD-denominated assets. Of course, since these results are based ona limited sample period, and are for a period when the Index was not calculated in real-time, results for a longerperiod, or for future periods, could be different. Past performance is not indicative of future performance and isno guarantee of future results.
All forms of investment carry some degree of risk. In addition, the Shares have certain unique risks, as describedin “Risk Factors” starting on page 15. Holding gold directly also has risks.
STRATEGY BEHIND THE SHARES
The Shares are intended to offer investors a new and different opportunity to participate in the gold market and toobtain exposure to the daily price of gold measured in the daily price of the Reference Currencies comprising theFX Basket against the USD through a single investment. Historically, the logistics of buying, storing and insuringgold have constituted a barrier to entry for some institutional and retail investors alike. Additionally, investorswho wanted to have exposure to gold in terms of the Reference Currencies comprising the FX Basket would haveto enter into multiple foreign exchange transactions, which can be difficult and inconvenient. The offering of theShares is intended to overcome these barriers to entry. The logistics of storing and insuring gold are dealt with bythe Custodian and the related expenses are built into the price of the Shares. Similarly, the logistics of havingexposure to gold in terms of the Reference Currencies comprising the FX Basket are dealt with by having theGold Delivery Provider make delivery to (or take delivery from) the Fund amounts of gold that represent changesin the value of the Reference Currencies comprising the FX Basket and the USD. Therefore, an investor in the
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Shares does not have any additional tasks or transaction costs over and above those associated with any otherpublicly traded security. Fund fees and expenses will, however, have a negative impact on the Fund’sperformance and create tracking error between the Fund and the Index.
The Shares are intended to provide institutional and retail investors with an alternative and simple means ofgaining investment benefits similar to those of holding Gold Bullion, while at the same time providing exposureto the value of the Reference Currencies comprising the FX Basket against the USD. The Shares are intended toappreciate when the value of gold increases and/or when the Reference Currencies comprising the FX Basket fallin value against the USD. The Shares are intended to depreciate in value when the value of gold decreases and/orwhen the value of the Reference Currencies comprising the FX Basket rise in value against the USD.
THE PERFORMANCE OF THE FUND UNDER VARIOUS SCENARIOS
Chart 5 on page 106 of this Prospectus illustrates how the Fund is intended to perform if (1) the price of goldincreases and the value of the USD (“USD”) against the Reference Currencies comprising the FX Basketdecreases; (2) the price of gold increases and the value of the USD against the Reference Currencies comprisingthe FX Basket increases; (3) the price of gold decreases and the value of the USD against the ReferenceCurrencies comprising the FX Basket decreases; and (4) the price of gold decreases and the value of the USDagainst the Reference Currencies comprising the FX Basket increases. The chart does not take into account anyfees and expenses of the Fund. Of course, there can be no guarantee of future results and past performance is notindicative of future performance.
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Description of the Solactive GLD® Long USD Gold Index
GENERAL
The Index is maintained and calculated by Solactive AG, the Index Provider. The description of the strategy andmethodology underlying the Index included in this Prospectus is based on rules published by the Index Provider(the “Index Rules”), and is qualified by the full text of the Index Rules. The Index Rules, and not this description,will govern the calculation and constitution of the Index and other decisions and actions related to itsmaintenance. The Index is the intellectual property of the Index Provider, and the Index Provider reserves allrights with respect to its ownership of the Index. The Index is published by the Index Provider under the tickersymbol “SOLGLDWE.”
The Index is described as a “notional” or “synthetic” portfolio or strategy because there is no actual portfolio ofassets to which any person is entitled or in which any person has any ownership interest. The Index referencescertain assets (i.e., gold and the Reference Currencies comprising the FX Basket), the performance of which willbe used as a reference point for calculating the daily performance of the Index (the “Index Level”). The Indexseeks to track the daily performance of a long position in physical gold and a short position in the ReferenceCurrencies comprising the FX Basket (as weighted in the Index) relative to USDs (i.e., a long USD exposureversus the FX Basket). If the Gold Price (as defined below) increases and the Reference Currencies comprisingthe FX Basket depreciate against the USD, the Index Level is intended to increase. Conversely, if the Gold Pricedecreases and the Reference Currencies comprising the FX Basket appreciate against the USD, the Index Level isintended to decrease. In certain cases, the appreciation of the Gold Price or the depreciation of the FX Basketcomprised of the Reference Currencies may be offset by the appreciation of the FX Basket comprised of theReference Currencies or the depreciation of the Gold Price, as applicable. The net impact of these changesdetermines the Index Level on a daily basis. The Index value is disseminated each Index Business Day atapproximately 6:00 a.m. New York time.
The term “Reference Currencies” refers to the following non-U.S. currencies: the euro, Japanese yen, Britishpound sterling, Canadian dollar, Swedish krona and Swiss franc. Rather than viewing the Index in terms ofpercentage weightings of gold and Reference Currencies comprising the FX Basket, it is more accurate to viewthe index as being weighted 100% in gold with an overlay of the Reference Currencies comprising the FX Basketthat essentially reflects how the gold is performing in terms of the Reference Currencies comprising the FXBasket. Just as gold price in terms of U.S. dollars is not weighted partially in gold and partially in U.S. dollars,the Index is not weighted partially in gold and partially in the Reference Currencies comprising the FX Basket.
VALUATION OF GOLD IN THE INDEX: THE GOLD PRICE
The daily price of gold generally is the primary driver of Index returns. Fluctuations in the value of the ReferenceCurrencies comprising the FX Basket have historically typically accounted for less than 1% of the daily Indexreturns. The Index values gold on a daily basis using the “Gold Price.” The Gold Price generally is the LBMAGold Price AM. The “LBMA Gold Price” means the price per troy ounce of gold stated in USDs as set via anelectronic auction process run twice daily at 10:30 a.m. and 3:00 p.m. London time each Business Day ascalculated and administered by the IBA and published by the LBMA on its website. The “LBMA Gold PriceAM” is the 10:30 a.m. LBMA Gold Price. IBA, an independent specialist benchmark administrator, provides theprice platform, methodology and the overall administration and governance for the LBMA Gold Price.
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VALUATION OF REFERENCE CURRENCIES COMPRISING THE FX BASKET IN THE INDEX
Pursuant to the Index methodology, the FX Basket was comprised of the following non-U.S. currencies with thefollowing weights for purposes of the Index:
Euro (EUR/USD) (57.6%)
Japanese yen (USD/JPY) (13.6%)
British pound sterling (GPB/USD) (11.9%)
Canadian dollar (USD/CAD) (9.1%)
Swedish krona (USD/SEK) (4.2%)
Swiss franc (USD/CHF) (3.6%)
At the close of each Index Business Day, the weight of each Reference Currency comprising the FX Basket isreset to the target weight for that Reference Currency as described above. Each Reference Currency comprisingthe FX Basket is expressed in the Index in terms of a number of foreign currency units relative to one USD (e.g.,a number of JPY per one USD) or in terms of a number of USDs per one unit of the reference currency (e.g., anumber of USDs per one Euro). In order to reflect the currency returns, the Index references the Spot Rates andSpot Next Forward Points associated with each Reference Currency. See “— The Reference Currencies — SpotRates of Each Reference Currency” and “— The Reference Currencies — Spot Next Forward Points of EachReference Currency” below.
For purposes of calculating the Index, the Index references the WMR Spot Rates and Spot Next Forward Pointsassociated with each Reference Currency comprising the FX Basket.
Determination of the Reference Currency Weights
The weights of each Reference Currency comprising the FX Basket were determined by the U.S. Federal Reservein 1978 and used in its “index of the weighted-average foreign exchange value of the U.S. dollar” (see August1978 Federal Reserve Bulletin, Volume 64, Number 8, p. 700). The weights were fixed and reflected theweighted average of the exchange values of the U.S. Dollar against 10 major foreign currencies. The weight ofeach currency in the index was equal to the country’s average share of total trade (imports plus exports) for thefive years 1972 to 1976. The base period of the index is March 1973, which corresponds to the start of the periodof generalized floating of the exchange rate.
The U.S. Federal Reserve revised the weights in 1998 in its “new summary measures of the foreign exchangevalue of the dollar” (see October 1998 Federal Reserve Bulletin, Volume 84, Number 10, p. 811). The U.S.Federal Reserve made this change shortly before the Euro replaced five of the currencies initially included in theindex (German deutsche mark, French franc, Italian lira, Dutch guilder and Belgium franc). The weightsattributed to the Euro are equal to the aggregated weights of the five currencies it substituted. Since that time, theU.S. Federal Reserve has not made other changes to the currency weights.
The pre-determined weightings attributed to the Reference Currencies comprising the FX Baskets are fixed.However, in certain exceptional cases (e.g., if the country of a Reference Currency replaces or phases out aReference Currency), the Index Provider may remove a Reference Currency from the FX Basket. In suchinstance, the weights of the remaining Reference Currencies comprising the FX Basket would be affected.
The Spot Rate of Each Reference Currency Comprising the FX Basket
A “Spot Rate” is the rate at which a Reference Currency comprising the FX Basket can be exchanged for USDson an immediate basis, subject to the applicable settlement cycle. In other words, if you wanted to convert USDs
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into Euros, you could enter into a spot transaction at the Spot Rate (subject to the bid/ask) and you would receiveEuros in a number of days, depending on the settlement cycle of that currency. Generally, the settlement of a“spot” transaction is two currency business days (except in the case of Canadian dollars, which settle on the nextBusiness Day). The following table sets forth the Reference Currencies comprising the FX Basket (each of whichis measured against USDs), the applicable Reuters Page for each Spot Rate referenced by the Index and themarket convention for quoting such currency.
Reference Currency Reuters Page Market Convention for Quotation
EUR/USD USDEURFIX=WM Number of USD per one EURUSD/JPY USDJPYFIX=WM Number of JPY per one USDGBP/USD USDGBPFIX=WM Number of USD per one GBPUSD/CAD USDCADFIX=WM Number of CAD per one USDUSD/SEK USDSEKFIX=WM Number of SEK per one USDUSD/CHF USDCHFFIX=WM Number of CHF per one USD
The Index generally references the Spot Rate for each Reference Currency as of 9:00 a.m. London time, but mayuse different fixing times for certain reasons as described in the Index Rules.
The World Markets Company plc (“WM”) provides an exchange rate service that publishes Spot Rates at fixedtimes throughout the global trading day. WM does not use a panel or polling solicitation process to obtainunderlying data in the benchmark calculation process. WM uses transactional data to set “Trade Rates,”reflecting data from actual transactions entered into on an arm’s length basis between buyers and sellers in thatmarket, where that data is available and reflects sufficient liquidity.
The Thomson Reuters Market Data System is the primary infrastructure used to source spot foreign exchangerates used in the calculation of the rates. Other systems may be used where the appropriate rates are not availableon the Thomson Reuters architecture.
Over a five-minute fix period, actual trades executed and bid and offer order rates from the order matching systems arecaptured every second from 2 minutes 30 seconds before to 2 minutes 30 seconds after the time of the fix. From eachdata source, a single traded rate will be captured — this will be identified as a bid or offer depending on whether thetrade is a buy or sell. A pre-defined spread set for each currency at each fix to reflect liquidity at different times of daywill be applied to the Trade Rate to calculate the opposite bid or offer. All captured trades will be subjected tovalidation checks. This may result in some captured data being excluded from the fix calculation.
Spot Next Forward Points of Each Reference Currency Comprising the FX Basket
As noted, in most spot currency transactions, settlement is two currency business days after the trade date. Aspot-next trade effectively extends the spot settlement cycle by one Business Day (i.e., the “next” day) and aSpot-Next Forward Point represents the difference in price between a spot transaction and a spot-next trade.Combining a spot-next trade with a spot transaction allows for exposure to the currency without taking delivery.By entering on each Index Business Day into notional spot-next trades that are closed the next Index BusinessDay against spot transactions, the Index is exposed to the Reference Currencies comprising the FX Basketwithout having to take delivery of these currencies. The Index approximates the cost of entering into a spot-nexttrade by linearly interpolating the cost of that trade based on the WM/Reuters “SW — Spot Week (One Week)”forward rates and a spot transaction.
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The following table sets forth the Reference Currencies comprising the FX Basket (each of which is measuredagainst USDs) and the applicable Reuters Page for each SW — Spot Week (One Week) forward rate referencedby the Index.
The Index references the SW — Spot Week (One Week) forward rate for each Reference Currency as of 9:00a.m. London time.
EXPOSURE OF THE INDEX TO THE REFERENCE CURRENCIES COMPRISING THE FX BASKET
The exposure of the Index to the Reference Currencies comprising the FX Basket is based on the pre-determinedweightings as described above. The Reference Currencies comprising the FX Basket are reset to thesepre-determined weightings at the close of each Index Business Day.
INDEX PROVIDER
The Index Provider will act in good faith and in a commercially reasonable manner in respect of determinations,interpretations and calculations made by it pursuant to the Index Rules.
All determinations, interpretations and calculations of the Index Provider relating to the Index Rules are final,conclusive and binding, and no person will be entitled to make any claim against the Index Provider in respectthereof. The Index Provider will not:
(a) be under any obligation to revise any determination, interpretation or calculation made or action taken forany reason in connection with the Index Rules or the Index; or
(b) have any responsibility to any person for any determination, interpretation or calculation made or anythingdone (or omitted) (whether as a result of negligence or otherwise) in respect of the Index, the publication ofthe Index Level (or failure to publish such level) or any use to which any person may put the Index or theIndex Levels.
CALCULATION OF THE INDEX LEVELS
On each Publication Day, the Index Provider calculates the Index Level in accordance with the terms set forth inthe Index Rules. The Index Level was set equal to 636.75 (the “Initial Index Level”) on January 3, 2007 (the“Index Start Date”), and the Index has been calculated live since July 20, 2016 (the “Index Live Date”).
No assurance can be given that the Index will be successful or that the Index will generate positive returns or willaccurately reflect the price of gold relative to the Reference Currencies comprising the FX Basket. See “RiskFactors” starting on page 15.
PUBLICATION OF THE INDEX LEVELS
The Index Provider publishes (in a manner determined by the Index Provider from time to time) the Index Levelas of each Index Business Day in accordance with the Index Rules. If an Index Business Day is not a PublicationDay, the Index Provider does not publish the Index Level and the Index Provider resumes publishing the Index
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Level on the immediately following Publication Day, subject to the consequences of the occurrence of a MarketDisruption Event or Extraordinary Event. A “Publication Day” is any day that (a) is an Index Business Day and(b) is not on a day on which a Market Disruption Event or Extraordinary Event has occurred or is continuing.
On any Index Business Day in which a Market Disruption Event or Extraordinary Event has occurred or iscontinuing, the Index Provider generally will calculate the Index based on the following fallback procedures:(i) where the Market Disruption Event is based on the Gold Price, the Index will be kept at the same level as theprevious Index Business Day and updated when the Gold Price is no longer disrupted; (ii) where the Gold Priceis not disrupted but one of the Reference Currency prices is disrupted, the Index will be calculated in the ordinarycourse except that the disrupted Reference Currency will be kept at its value from the previous Index BusinessDay and updated when it is no longer disrupted; and (iii) if both the Gold Price and a Reference Currency priceare disrupted, the Index will be kept at the same level as the previous Index Business Day and updated when suchprices are no longer disrupted.
Notwithstanding anything to the contrary, the Index Provider may cease publication of the Index Level at anytime in its sole discretion, and nothing in this Prospectus shall be construed as an agreement by the IndexProvider to continue to calculate the Index Level if the Index Provider has elected to cease publication.
The Index Provider publishes an Index Level that is rounded to ten decimal points.
AMENDMENTS TO THE INDEX RULES
The Index Rules for the Index may be amended from time to time by the Index Provider pursuant to the terms ofthe Index Rules. Pursuant to the terms of the Index Rules, the Index Provider may only change the rules tomaintain compliance with the relevant laws and regulations applicable with the regard to an index provider orindex administrator, and to ensure the continued integrity of the Index. The Index Provider will use reasonableefforts to provide at least two Index Business Days prior notice before the day on which amendments to the Indexwill become effective.
Although the Index Rules are intended to be comprehensive and accurate, ambiguities may arise and errors oromissions may have been made. If an ambiguity, error or omission arises, the Index Provider will resolve oraddress such ambiguity, error or omission in its sole discretion and, if necessary, the Index Provider will amendthe Index Rules to reflect such resolution.
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Operation of the Fund
Because the Fund generally holds only Gold Bullion (and not USDs or the Reference Currencies comprising theFX Basket), the actual economic impact of changes to the value of the Reference Currencies comprising the FXBasket against the USD from day-to-day can be reflected in the Fund only by moving an amount of Gold Bullionounces of equivalent value into or out of the Fund. Therefore, the Fund seeks to track the performance of theIndex by entering into a transaction each Business Day with the Gold Delivery Provider pursuant to which GoldBullion is moved into or out of the Fund. The terms of this transaction are set forth in the Gold DeliveryAgreement. The Fund has not and does not intend to enter into any other Gold Bullion transactions other thanwith the Gold Delivery Provider as described in the Gold Delivery Agreement (except that AuthorizedParticipants will deliver or receive Gold Bullion from the Fund in connection with the purchase or redemption ofCreation Units and the Fund will sell Gold Bullion to cover Fund expenses). The Fund does not hold anynon-U.S. currency or any financial instruments linked to a non-U.S. currency or index, other than the Fund’srights and obligations under the Gold Delivery Agreement.
Gold Bullion held by the Fund will only be sold (1) on an as-needed basis to pay Fund expenses; (2) in the eventthe Fund terminates and liquidates its assets; or (3) as otherwise required by law or regulation. The sale of GoldBullion by the Fund, and the transfer of Gold Bullion out of the Fund pursuant to the Gold Delivery Agreement,is a taxable event to Shareholders. See “United States Federal Tax Consequences — Taxation of U.S.Shareholders.”
THE GOLD DELIVERY AGREEMENT
Pursuant to the terms of the Gold Delivery Agreement, the Fund enters into a transaction to deliver Gold Bullionto, or receive Gold Bullion from, the Gold Delivery Provider each Business Day. The amount of Gold Bulliontransferred essentially is equivalent to the Fund’s profit or loss as if the Fund had exchanged the ReferenceCurrencies comprising the FX Basket, in the proportion in which they are reflected in the Index, for USDs in anamount equal to the Fund’s holdings of Gold Bullion on such day. In general, if there is a currency gain (i.e., thevalue of the USD against the Reference Currencies comprising the FX Basket increases), the Fund will receiveGold Bullion. In general, if there is a currency loss (i.e., the value of the USD against the Reference Currenciescomprising the FX Basket decreases), the Fund will deliver Gold Bullion. In this manner, the amount of GoldBullion held by the Fund is adjusted to reflect the daily change in the value of the Reference Currenciescomprising the FX Basket against the USD. The Gold Delivery Agreement requires Gold Bullion ounces equal tothe value of the Gold Delivery Amount to be delivered to the custody account of the Fund or Gold DeliveryProvider, as applicable. The fee that the Fund pays the Gold Delivery Provider for its services under the GoldDelivery Agreement is accrued daily and reflected in the calculation of the Gold Delivery Amount.
Subject to the terms of the Gold Delivery Agreement, the Gold Delivery Provider (i) calculates the Gold DeliveryAmount on each Business Day and (ii) delivers Gold Bullion ounces equal to the USD value of the GoldDelivery Amount into or out of the Fund generally within two Business Days, provided that such days are alsodays on which the delivery of Gold Bullion can be settled. The Gold Delivery Amount is the amount of GoldBullion ounces to be delivered into or out of the Fund to reflect price movements in the Reference Currenciescomprising the FX Basket against the USD on each Business Day (assuming no “Market Disruption Event” or“Extraordinary Event” has occurred or is continuing as described in more detail below).
CALCULATION OF THE GOLD DELIVERY AMOUNT
On each Business Day (assuming no “Market Disruption Event” or “Extraordinary Event” has occurred or iscontinuing as described in more detail below), the Gold Delivery Provider determines in good faith and withreasonable due diligence (1) the total number of outstanding and to be issued Shares on such day less any Sharesfor which a redemption order is received by the Administrator prior to such day, (2) the daily change in the Indexlevel with respect to the Fund’s NAV and the Gold Delivery Provider’s annual fee of 0.17% of the Fund’s NAV,
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and (3) the Gold Delivery Amount based upon the values calculated in (1) and (2) and pursuant to formulascontained in the Gold Delivery Agreement. The Gold Delivery Provider generally makes these calculationsoutside of U.S. market hours (by 6:30 a.m. New York time).
If the Gold Delivery Amount is a positive number (meaning that the Fund has experienced a currency gain on thenotional short position in the FX Basket comprised of Reference Currencies), the Gold Delivery Provider willtransfer to the Fund’s custody account an amount of Gold Bullion (in ounces) equal to the Gold DeliveryAmount. If the Gold Delivery Amount is a negative number (meaning that the Fund has experienced a currencyloss on the notional short position in the FX Basket comprised of Reference Currencies), the Fund will transfer tothe Gold Delivery Provider’s custody account an amount of Gold Bullion (in ounces) equal to the Gold DeliveryAmount. The fee that the Fund pays the Gold Delivery Provider for its services under the Gold DeliveryAgreement is accrued daily and reflected in the calculation of the Gold Delivery Amount.
Creation and Redemption of Shares
The Gold Delivery Agreement also specifies how the amount of Gold Bullion representing a Creation Unit isdetermined in connection with creation and redemption transactions (see “Creation and Redemption of Shares”).
MARKET DISRUPTION EVENTS AND EXTRAORDINARY EVENTS
From time to time, unexpected events may cause the calculation of the Index and/or the operation of the Fund tobe disrupted. These events are expected to be relatively rare, but there can be no guarantee that these events willnot occur. These events are referred to as either “Market Disruption Events” or “Extraordinary Events.” Theoccurrence of a Market Disruption Event for ten consecutive Index Business Days generally would be consideredan Extraordinary Event. Market Disruption Events generally include disruptions in the trading of gold or theReference Currencies comprising the FX Basket, delays or disruptions in the publication of the LBMA GoldPrice or the Reference Currency prices, and unusual market or other events that are tied to either the trading ofgold or the Reference Currencies comprising the FX Basket or otherwise have a significant impact on the tradingof gold or the Reference Currencies comprising the FX Basket. For example, market conditions or other eventswhich result in a material limitation in, or a suspension of, the trading of physical gold generally would beconsidered Market Disruption Events, as would material disruptions or delays in the determination or publicationof the LBMA Gold Price AM. Similarly, market conditions which prevent, restrict or delay the Gold DeliveryProvider’s ability to convert a Reference Currency to USDs or deliver a Reference Currency through customarychannels generally would be considered a Market Disruption Event, as would material disruptions or delays inthe determination or publication of WMR spot prices for any Reference Currency comprising the FX Basket. Thecomplete definition of a Market Disruption Event is set forth in “Market Disruption Events and ExtraordinaryEvents.”
PRINCIPALS AND KEY PERSONNEL OF THE CPO
The principals of the CPO are Joseph R. Cavatoni, who serves as Principal Executive Officer and President;Gregory S. Collett, who serves as the Vice President; William J. Shea, who serves as Chairman of the Board ofDirectors of the CPO (the “Board”) and is a member of the Board’s Audit Committee; Aram Shishmanian, whoserves as a Director of the Board; Rocco Maggiotto, who serves as a Director of the Board and is Chairman ofthe Board’s Audit Committee; Neal Wolkoff, who serves as a Director of the Board and is a member of theBoard’s Audit Committee; and Laura S. Melman, who serves as Chief Financial Officer and Treasurer. The CPOand principals do not have an ownership or beneficial interest in the Fund, nor do they engage in, or intend toengage in, proprietary commodity interest trading.
Joseph R. Cavatoni, age 50, is the Principal Executive Officer and President and, since February 2017 has been aprincipal of, the Sponsor. He joined the World Gold Council as Managing Director USA and ETFs in September2016. From October 2016 to the present, he has served as Principal Executive Officer of World Gold Trust
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Services, LLC (“WGTS LLC”), sponsor of the SPDR® Gold Trust and an affiliate of the Sponsor. Prior to that,from April 2009 to December 2015 he served with BlackRock, Inc., a publicly traded investment managementfirm, first as the head of iShares Capital Markets in Asia Pacific (2009) and as Head of iShares Capital Marketsand Product Development in the same region (2009-2011). From November 2011 to December 2015,Mr. Cavatoni served as a BlackRock Managing Director and Head of iShares Capital Markets, Americas. FromAugust 2003 to April 2009, Mr. Cavatoni served with UBS Securities Asia Limited, first as Executive Director,Head of Swaps, Asia (2003-2006) and then as Managing Director, Head of Equity Finance APAC (2006-2009).Prior to that, Mr. Cavatoni was on garden leave during June and July 2003. Prior to joining UBS Securities AsiaLimited, he served with Merrill Lynch & Company, Inc. from June 1994 to May 2003 as Senior Credit Analyst,Credit and Risk Management Team in New York (1994-1995), Vice President, Credit and Risk ManagementTeam, Hong Kong (1995-2000) and Director, Head of Prime Brokerage Asia, Japan and Australia (2000-2003).Mr. Cavatoni received his Bachelor of Business Administration degree from The George Washington Universityand his Master of Business Administration degree from Northwestern University and the Hong Kong Universityof Science and Technology.
Gregory Collett, age 47, joined the World Gold Council in April 2014 and currently serves as Director ofInvestment Products for WGC USA, Inc., a wholly-owned, indirect subsidiary of the World Gold Council. In thatcapacity, his responsibilities include overseeing the SPDR® Gold Trust (Symbol: GLD), the largest exchange-traded fund in the world backed by physical gold. Mr. Collett became a registered Associated Person and ListedPrincipal of the Sponsor on August 19, 2015 and August 13, 2015, respectively. From January 2010 to March2014, Mr. Collett was a partner with the law firm of Collett Clark LLP, where he primarily handled financialindustry transactions and disputes involving commodity futures. Prior to founding a law firm in January 2010,Mr. Collett pursued personal endeavors after voluntarily departing Deutsche Bank in June 2008. From October2002 through June 2008, Mr. Collett worked for Deutsche Bank where he launched the Powershares DB line ofcommodity and currency ETFs and ETNs. In that capacity, Mr. Collett held the title of Director and ChiefOperating Officer of DB Commodity Services LLC, which was the managing owner and commodity pooloperator of the ETFs. Mr. Collett became a registered Associated Person of Deutsche Bank Securities Inc. onDecember 22, 2006 and a Listed Principal of DB Commodity Services LLC on June 12, 2006. He withdrew hisregistration as an Associated Person of Deutsche Bank Securities Inc. and Listed Principal of DB CommodityServices LLC on June 20, 2008. Before joining Deutsche Bank, Mr. Collett was an associate with the law firm ofSidley Austin LLP from March 2000 to October 2002 and an attorney-advisor for the Commodity FuturesTrading Commission. Mr. Collett received his J.D. from George Washington University Law School in 1997 andhis B.A. from Colgate University in 1993.
Laura S. Melman, age 51, is the Chief Financial Officer and Treasurer of the Sponsor, and has served as theTreasurer and Chief Operating Officer of WGC USA, Inc., an affiliate of the Sponsor, since January 22, 2018.Ms. Melman became a Listed Principal of the Sponsor on March 7, 2018. Ms. Melman was previously employedby PIMCO LLC (“PIMCO”), an investment management firm, from June 2012 until January 2018. During hertenure at PIMCO, Ms. Melman was Senior Vice President responsible for taxation, accounting and analytics forPIMCO’s funds and ETFs worldwide. Ms. Melman’s responsibilities included complex product development,accounting, and taxation of financial instruments and investment strategies. From February 2017 to January2018, Ms. Melman also served as an officer for PIMCO’s open-end and closed-end funds and ETFs. Prior toPIMCO, Ms. Melman served as Executive Director and Tax Director at J.P. Morgan Asset Management, an assetmanagement firm, managing tax, accounting and compliance issues for J.P. Morgan’s registered and unregisteredfund products from August 2006 to June 2012. From September 2000 to August 2006, Ms. Melman served asVice President of product development at BNY Mellon, a global banking and financial services institution, whereshe helped to develop and launch the first exchange-traded gold trusts. Ms. Melman is listed as co-inventor of thebusiness method patents that support the structure of exchange-traded commodity trusts. Prior to working withinproduct development, Ms. Melman served with BNY Mellon as Vice President of taxation and fund accountingfrom September 1992 to September 2000. Ms. Melman has also worked at PwC, a professional services firm thatoffers audit, taxation, advisory, and other services, as a tax consultant within the firm’s financial services practicefrom September 1989 to September 1992. Ms. Melman earned her Bachelor of Science degree from Rutgers
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University and received her Master of Business Administration in Accounting from the Rutgers Graduate Schoolof Management. She is a Certified Public Accountant.
William J. Shea, age 70, is Chairman of the Board of Directors of the Sponsor and a member of the Board’sAudit Committee, and a principal of the CPO since February 2017. He was appointed to the Board when it wasformed in January 2017. In January 2013, he was appointed to the Board of Directors of WGTS LLC, the sponsorof the largest exchange-traded fund in the world backed by physical gold and an affiliate of the Sponsor. Heserves as Chairman of WGTS LLC’s Board of Directors and is a member of its Audit Committee. From March1998 to the present, he has served on the Board of Directors of Caliber ID, Inc., which provides medicalequipment supporting imaging and diagnosis at the cellular level in the treatment of skin cancer and otherdiseases, and was appointed Chairman in December 2010. Mr. Shea has been a member of the boards of AIGSunAmerica, a mutual funds company, from December 2004 to September 2016, and has served as Chairman ofthe Board of Demoulas Supermarkets, Inc., a privately held retail grocery store chain in New England, fromMarch 1999 to the present. He was a board member of Boston Private Financial Holdings, a public bank holdingcompany, and its related bank from June 2005 to May 2014 and a board member of NASDAQ OMXBX/theBoston Stock Exchange, a US stock exchange, from March 1998 to December 2014.
The Sponsor has concluded that Mr. Shea should serve as Director because of the knowledge and extensiveexperience he gained in a variety of leadership roles with different financial institutions and an internationalpublic accounting firm, his extensive experience in business restructurings, and the experience he has gainedserving as a director of WGTS LLC.
Aram Shishmanian, age 67, is a Director on the Board of Directors of the Sponsor and a principal of the CPOsince February 2017. He was appointed to the Board when it was formed in January 2017. In January 2013, hewas appointed to the Board of Directors of WGTS LLC, the sponsor of the largest exchange-traded fund in theworld backed by physical gold and an affiliate of the Sponsor. Since January 2009, he has also served as ChiefExecutive Officer of the World Gold Council, the ultimate parent of the Sponsor.
The Sponsor has concluded that Mr. Shishmanian should serve as Director because of the knowledge andextensive experience he gained in a variety of leadership roles with different financial institutions, his extensiveexperience as a management consultant and as a director on other boards, and the experience he has gainedserving as a director of WGTS LLC.
Rocco Maggiotto, age 68, is a Director on the Board of Directors of the Sponsor, Chairman of the Board’s AuditCommittee and a principal of the CPO since February 2017. He was appointed to the Board when it was formedin January 2017. In January 2013, he was appointed to the Board of Directors of WGTS LLC, sponsor of thelargest exchange-traded fund in the world backed by physical gold and an affiliate of the Sponsor. He also servesas Chairman of the Audit Committee of WGTS LLC’s Board of Directors. Mr. Maggiotto is the Chief ExecutiveOfficer and Co-Founder of PWRCierge, LLC, an independent power company providing Cogeneration solutionsand other energy management solutions for Continuing Care Retirement Communities and other non-profitinstitutions. He has served in this capacity from October 2012 to the present. From June 2012 to the present,Mr. Maggiotto has been the Managing Principal of Manchester Consulting Group, which consults with financialinstitutions. From June 2006 to June 2012, Mr. Maggiotto was Executive Vice President and Global Head ofCustomer and Distribution Management for Zurich Financial Services’ $35 billion General Insurance Business.He was responsible for the development and implementation of Zurich’s customer and distribution managementstrategies, its global industry practices and its relationships with the global broker organizations and served asChairman of General Insurance’s Growth Agenda.
The Sponsor has concluded that Mr. Maggiotto should serve as Director because of the knowledge and extensiveexperience he gained in a variety of leadership roles with different financial institutions and international publicaccounting firms, his extensive experience as a director on other boards, and the experience he has gained servingas a director of WGTS LLC.
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Neal Wolkoff, age 63, is a Director on the Board of Directors of the Sponsor, a member of the Board’s AuditCommittee and a principal of the CPO since February 2017. He was appointed to the Board when it was formedin January 2017. In January 2013, he was appointed to the Board of Directors of WGTS LLC, the sponsor of thelargest exchange-traded fund in the world backed by physical gold and an affiliate of the Sponsor. He also servesas a member of the Audit Committee of WGTS LLC’s Board of Directors. In November 2003, Mr. Wolkofffounded, and since that date has served as CEO of Wolkoff Consulting Services, LLC, a consulting firm. FromDecember 2016 to the present, he has been a Principal in Health Care Financial Exchange Inc., a Delawarec-corporation, which is in the business of designing financial products for the healthcare industry. From July2014 to December 2016, he was a member of U.S. Health Futures, LLC, which is in the business of designingfinancial products for the healthcare industry. Previously, from October 2008 to February 2012, he served as theChief Executive Officer of ELX Futures, L.P., founded by major dealer banks and trading firms to compete in thearea of interest rate futures.
The Sponsor has concluded that Mr. Wolkoff should serve as Director because of the knowledge and extensiveexperience he gained in a variety of leadership roles at a major stock exchange and futures exchange, theexperience he gained as a trial attorney, his extensive experience as a director on other boards, and the experiencehe has gained serving as a director of WGTS LLC.
WGC (US) Holdings Inc. is an affiliate of the World Gold Council and the Sponsor’s sole member. The WorldGold Council is the market development organization for the gold industry with 19 members with miningoperations in 40 countries. With its unique insight into the global gold market, the World Gold Council seesunrealized potential for gold across society and intervenes to create new possibilities for the use of gold. Workingwith various organizations across the gold supply chain, the World Gold Council attempts to stimulate demand,develop innovative uses of gold and takes new products to market. As the global industry authority on gold, theWorld Gold Council offers comprehensive analysis of the industry, giving decision makers useful informationand insight into the drivers of gold demand.
The Sponsor has a code of ethics (the “Code of Ethics”) that applies to its executive officers and agents,including its Principal Executive Officer and Chief Financial Officer, who perform certain functions with respectto the Trust that, if the Trust had executive officers would typically be performed by them. The Code of Ethics isavailable free of charge upon request by writing the Sponsor at 685 Third Avenue, 27th Floor, New York,NY 10017 or calling the Sponsor at (212) 317-3800. The Sponsor’s Code of Ethics is intended to be acodification of the business and ethical principles that guide the Sponsor, and to deter wrongdoing, promotehonest and ethical conduct, avoid conflicts of interest, and foster compliance with applicable governmental laws,rules and regulations, the prompt internal reporting of violations and accountability for adherence to the Code ofEthics.
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Fund Expenses
The Fund’s only ordinary recurring expenses are expected to be the fee paid to the Sponsor at an annual rate of0.33% of the daily net asset value of the Fund and the fee paid to the Gold Delivery Provider at an annual rate of0.17% of the daily net asset value of the Fund, so that the Fund’s total annual expense ratio is expected to beequal to 0.50%.
In exchange for the Sponsor’s fee the Sponsor has agreed to assume the ordinary fees and expenses incurred bythe Fund, including but not limited to the following: fees charged by the Administrator, the Custodian, the IndexProvider, Marketing Agent and the Trustee, NYSE Arca listing fees, typical maintenance and transaction fees ofthe DTC, SEC and CFTC registration fees, printing and mailing costs, audit fees and expenses, up to $100,000per annum in legal fees and expenses and applicable license fees. The Sponsor shall bear expenses in connectionwith the issuance and distribution of the securities being registered. The Sponsor is not required to pay anyextraordinary expenses not incurred in the ordinary course of the Fund’s business. Extraordinary expenses arefees and expenses that are unexpected or unusual in nature, such as legal claims and liabilities and litigation costsor indemnification or other unanticipated expenses. Extraordinary fees and expenses also include materialexpenses that are not currently anticipated obligations of the Fund. In addition, the Sponsor shall not be requiredto pay any charges, fees, transaction or other costs in connection with any gold delivery agreement or ISDAagreement in connection with the delivery of Gold Bullion to or from the Fund. The Fund is responsible for thepayment of such expenses to the extent any such expenses are incurred. In addition, the Fund remains responsiblefor the Gold Delivery Provider’s Fee. Routine operational, administrative and other ordinary expenses are notdeemed extraordinary expenses. The Fund sells Gold on an as-needed basis to pay the Sponsor’s fee.
In certain exceptional cases the Fund will pay for some expenses. These exceptions include expenses notassumed by the Sponsor (described in the immediately preceding paragraph), taxes and governmental charges,expenses and costs of any extraordinary services performed by the Trustee or the Sponsor on behalf of the Trustor action taken by the Trustee or the Sponsor to protect the Trust or the interests of Shareholders, indemnificationof the Sponsor under the Depositary Agreement, and legal expenses in excess of $100,000 per year.
Shareholders do not have the option of choosing to pay their proportionate share of the Fund’s expenses in lieu ofhaving their share of expenses paid by the sale of the Fund’s Gold. Each sale of Gold by the Fund will be ataxable event to Shareholders. See “United States Federal Tax Consequences — Taxation of U.S. Shareholders.”
SALES OF GOLD
The Sponsor will sell the Fund’s Gold Bullion as necessary to pay the Fund’s expenses. When selling GoldBullion to pay expenses, the Sponsor endeavors to sell the smallest amounts of Gold Bullion needed to payexpenses in order to minimize the Fund’s holdings of assets other than Gold Bullion and endeavors to sell at theLBMA Gold Price AM. The Sponsor will place orders with Gold Bullion dealers (which may include theCustodian) through which the Sponsor expects to receive the most favorable price and execution of orders. TheSponsor shall not be liable for depreciation or loss incurred by reason of any sale. See “United States Federal TaxConsequences — Taxation of U.S. Shareholders” for information on the tax treatment of Gold Bullion sales.
The Sponsor will sell the Fund’s Gold Bullion if that sale is required by applicable law or regulation or inconnection with the termination and liquidation of the Fund.
Any property received by the Fund other than Gold Bullion, cash or an amount receivable in cash (such as, forexample, an insurance claim) will be promptly sold or otherwise disposed of by the Sponsor and the resultingproceeds will be credited to the Fund’s cash account and/or converted into Gold Bullion.
Gold Bullion will also be delivered into or out of the Fund in accordance with the Gold Delivery Agreement. Formore information, see the section herein titled “The Gold Delivery Provider and the Gold Delivery Agreement.”
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CASH ACCOUNT AND RESERVE ACCOUNT
The Sponsor will cause the Fund to maintain a cash account in which proceeds of Gold Bullion sales and othercash received by the Fund may be held. The Sponsor may withdraw funds from the cash account to establish areserve account for any taxes, other governmental charges and contingent or future liabilities.
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Breakeven Analysis
The following table indicates the approximate percentage and dollar returns required for the value of an investmentin a Share of the Fund to equal the amount originally invested 12 months after the investment was made. Thisanalysis assumes that the Shares have a constant month-end NAV, that the NAV per Share is equal to $120.38,which was the NAV per Share determined on November 27, 2018, and that such NAV per Share is the “SellingPrice” shown in the table below. Note that the actual NAV per Share of the Fund is likely to change on a daily basis.
The table, as presented, is only an approximation. The capitalization of the Fund may directly affect the amountsof one or more of these charges. The Sponsor’s Fee and the Gold Delivery Provider Fee are calculated as apercentage of the Net Asset Value of the Fund. The table does not reflect the additional transaction fees and costsrequired for the creation and redemption of Creation Units.
THE INFORMATION CONTAINED IN THIS BREAKEVEN ANALYSIS REFLECTS ESTIMATES DETERMINEDAS OF NOVEMBER 27, 2018. ACTUAL RESULTS MAY VARY SIGNIFICANTLY.
(1) Dollar amounts are rounded to the nearest cent and percentages are rounded to two decimal places.(2) The Fund pays the Sponsor the Sponsor’s Fee, which accrues daily at an annualized rate of 0.33% of the
NAV of the Fund, payable by the Fund monthly in arrears. The Sponsor’s Fee is paid in consideration of theservices provided by the Sponsor, including procuring the services of the Fund’s other service providers andits payment of certain related fees and expenses that would otherwise have been payable by the Fund.
(3) The Fund pays the Gold Delivery Provider the Gold Delivery Provider’s Fee, which accrues and is payableby the Fund daily at an annual rate of 0.17% of the NAV of the Fund. The Fund will pay any charges, fees,transaction or other costs in connection with any gold delivery agreement or ISDA agreement in connectionwith the delivery of Gold Bullion to or from the Fund to the extent any such expenses are incurred. Otherthan the Gold Delivery Provider Fee, such expenses are not anticipated.
(4) The Sponsor is responsible for paying Organization and Offering Expenses, which consist of the costs andexpenses incurred in connection with organizing the Fund and the initial issuance and distribution of the Shares.Organization and Offering Expenses include SEC and CFTC registration fees, printing and mailing costs, listingand licensing fees, legal fees and expenses, accounting fees and expenses and the fees and expenses of certainother service providers to the Fund incurred in connection with the initial issuance and distribution of the Shares.The Fund does not separately bear the costs of Organization and Offering Expenses. Additional informationrelating to Organization and Offering Expenses may be found under “Fund Expenses.”
(5) The Sponsor is responsible for paying ongoing Fund Operating Expenses other than the Sponsor Fee and theGold Delivery Provider Fee, which consist of the following: (1) fees paid to the Trustee; (2) fees paid to theCustodian, Administrator and other service providers; and (3) various Fund administration fees, includingprinting and mailing costs, legal and audit fees, registration fees and NYSE Arca listing fees. The Sponsor isnot responsible for paying extra ordinary expenses of the Fund. Additional information relating to FundOperating Expenses may be found under “Fund Expenses.”
(6) You may pay customary brokerage commissions in connection with purchases of Shares. Because suchbrokerage commission rates will vary from investor to investor, such brokerage commissions have not beenincluded in the breakeven table. Investors are encouraged to review the terms of their brokerage accounts fordetails on applicable charges. This breakeven analysis does not include fees charged in connection with thecreation/redemption process, currently totaling $500, as such fees are only payable by AuthorizedParticipants in creation and redemption transactions.
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Description of the Trust
The Trust is organized as a Delaware statutory trust consisting of multiple separate Series. Delaware TrustCompany, a Delaware trust company with trust powers is the sole Trustee of the Trust. Each Series issuescommon units of beneficial interest, or Shares, which represent units of fractional undivided beneficial interest inand ownership of such Series. The Trust was organized into separate series as a Delaware statutory trust ratherthan as multiple separate trusts in order to achieve certain administrative efficiencies. As of the date of thisProspectus, the Trust has established six series, five of which have not commenced operations and have no assetsor liabilities. The other series, the SPDR® Long Dollar Gold Trust (the “Fund”) is offered pursuant to thisProspectus. As of the date of this Prospectus, the other Series of the Trust are not being offered. The assets of theFund include only Gold Bullion, Gold Bullion receivables and cash, if any, including, without limitation, GoldBullion delivered to the Fund in connection with Creation transactions or by the Gold Delivery Provider pursuantto the Gold Delivery Agreement.
The Trust was formed and is operated in a manner such that each Series is liable only for obligations attributableto such Series. This means that Shareholders of the Fund are not subject to the losses or liabilities of any otherSeries and Shareholders of the other Series are not subject to the losses or liabilities of the Fund. Accordingly,the debts, liabilities, obligations and expenses, or collectively, Claims, incurred, contracted for or otherwiseexisting solely with respect to the Fund or a Series are enforceable only against the assets of the Fund or suchSeries, as applicable, and not against any other Series or the Trust generally. This limitation on liability isreferred to as the “Inter-Series Limitation on Liability.” The Inter-Series Limitation on Liability is expresslyprovided for under the Delaware Statutory Trust Act, which provides that if certain conditions are met, then thedebts of any particular series will be enforceable only against the assets of such series and not against the assetsof any other Fund or the Trust generally. For the avoidance of doubt, the Inter-Series Limitation on Liabilityapplies to all series of the Trust, including both the Fund and any other Series.
The Fund expects to create and redeem Shares from time to time but only in Creation Units (a Creation Unitequals a block of 1,000 Shares). The number of outstanding Shares is expected to increase and decrease fromtime to time as a result of the creation and redemption of Creation Units. The creation and redemption ofCreation Units requires the delivery to the Fund or the distribution by the Fund of the amount of Gold Bullionrepresented by the Creation Units being created or redeemed. The total amount of Gold Bullion required for thecreation of Creation Units will be based on the combined NAV of the number of Creation Units being created orredeemed. The initial amount of Gold Bullion required for deposit with the Fund to create Shares is 1,000 ouncesper Creation Unit. The number of ounces of Gold Bullion required to create a Creation Unit or to be deliveredupon redemption of a Creation Unit is expected to change over time depending on Index performance net of thefees charged by the Fund and the Gold Delivery Provider. Creation Units may be created or redeemed only byAuthorized Participants, who will pay a transaction fee of $500 for each order to create or redeem Creation Units.Authorized Participants may sell to other investors all or part of the Shares included in the Creation Units theypurchase from the Fund. See “Plan of Distribution.” The number of Shares in a Creation Unit, and the transactionfee associated with such Creation Units, may be changed by the Sponsor at any time in its sole discretion.
Investors may obtain on a 24-hour basis gold pricing information based on the spot price for an ounce of goldfrom various financial information service providers. Current spot prices are also generally available with bid/askspreads from Gold Bullion dealers. In addition, the Sponsor’s website at http://www.spdrgoldshares.comprovides ongoing pricing information for gold spot prices and the Shares. Market prices for the Shares areavailable from a variety of sources including brokerage firms, information websites and other information serviceproviders. The NAV of the Fund as calculated each Business Day by the Administrator is posted on theSponsor’s website. The Fund has no fixed termination date and the Sponsor may terminate the Fund for anyreason in its sole discretion. See “The Declaration of Trust — Termination of the Trust.”
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Description of Key Service Providers
THE SPONSOR
The Sponsor is a Delaware limited liability company formed on August 1, 2014. The Sponsor is responsible forestablishing the Trust and for the registration of the Shares. The Sponsor generally oversees the performance of theFund’s principal service providers, but does not exercise day-to-day oversight over such service providers. TheSponsor, with assistance and support from the Administrator, is responsible for preparing and filing periodic reportson behalf of the Fund with the SEC and will provide any required certification for such reports. The Sponsor willdesignate the independent registered public accounting firm of the Fund and may from time to time employ legalcounsel for the Fund. The Sponsor is a CPO of the Fund, is registered in such capacity with the CFTC and isregistered as a member of the National Futures Association. The Sponsor is responsible for administering the GoldDelivery Agreement. The Sponsor has not previously operated any other pools or traded any other accounts. TheSponsor is an affiliate of World Gold Trust Services LLC, the sponsor of the SPDR® Gold Trust. To assist theSponsor in marketing the Shares, the Sponsor has entered into the Marketing Agent Agreement with the MarketingAgent and the Fund. See “— The Marketing Agent” for more information about the Marketing Agent. The Sponsormaintains a public website on behalf of the Fund (http://www.spdrgoldshares.com), which contains informationabout the Fund and the Shares. Information about the Fund’s past performance is available on page 28.
The CFTC and the NFA regulate the activities of CPOs and the CFTC has adopted regulations with respect tocertain of such persons’ activities. Pursuant to its authority, the CFTC requires a CPO to deliver a prospectus to aprospective pool participant prior to or when it delivers the pool subscription agreement to the participant, provideNFA and pool participants annual financial statements, provide pool participants monthly or quarterly accountstatements, and keep accurate, current and orderly records with respect to each pool it operates. The Sponsor willdeliver a prospectus to each Authorized Participant and make the prospectus available on a website and comply withapplicable CFTC requirements, including those related to disclosure and recordkeeping. The CFTC may suspendthe registration of a CPO if the CFTC finds that the operator has violated the CEA or regulations thereunder and incertain other circumstances. Suspension, restriction or termination of an entity’s registration as a CPO wouldprevent it, until such time (if any) as such registration were to be reinstated, from managing, and might result in thetermination of, the Fund. The Fund is not registered with the CFTC in any capacity.
Shareholders are afforded certain rights for reparations under the CEA. Shareholders may also be able tomaintain a private right of action for certain violations of the CEA. The CFTC has adopted rules implementingthe reparation provisions of the Commodity Exchange Act, which provide that any person may file a complaintfor a reparations award with the CFTC for violation of the CEA against a floor broker, futures commissionmerchant, introducing broker, commodity trading advisor, commodity pool operator, and their respectiveassociated persons.
Pursuant to authority in the CEA, the NFA has been formed and registered with the CFTC as a “registeredfutures association.” At the present time, the NFA is the only non-exchange self-regulatory organization forcommodities professionals. WGC is a member of the NFA. NFA members are subject to NFA standards relatingto fair trade practices, financial condition and consumer protection. As the self-regulatory body of thecommodities industry, the NFA promulgates rules governing the conduct of commodity professionals anddisciplines those professionals who do not comply with such standards. The CFTC has delegated to the NFAresponsibility for the registration of commodity trading advisors, commodity pool operators, futures commissionmerchants, introducing brokers and their respective associated persons and floor brokers.
THE TRUSTEE
Delaware Trust Company, a Delaware trust company, is the sole Trustee of the Trust and the Fund. The Trustee’sprincipal offices are located at 2711 Centerville Rd, Suite 400, Wilmington, DE 19808. The Trustee’s duties andliabilities with respect to the offering of the Shares and the management of the Trust and the Fund are limited to
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its express obligations under the Certificate of Trust and the Declaration of Trust. The rights and duties of theTrustee and the Shareholders are governed by the provisions of the Delaware Statutory Trust Act and by theDeclaration of Trust.
The Trustee accepts service of legal process on behalf of the Trust and the Fund in the State of Delaware and willmake certain filings under the Delaware Statutory Trust Act. The Trustee does not owe any other duties to theTrust or the Shareholders. The Declaration of Trust provides that the Trustee is compensated by the Sponsor, asappropriate. The Sponsor has the discretion to replace the Trustee.
The Trustee has not signed the registration statement of which this Prospectus is a part, and only the assets of theFund are subject to issuer liability under the federal securities laws for the information contained in thisProspectus and under federal securities laws with respect to the issuance and sale of the Shares. Under such laws,neither the Trustee, either in its capacity as Trustee or in its individual capacity, nor any director, officer orcontrolling person of the Trustee is, or has any liability as, the issuer or a director, officer or controlling person ofthe issuer of the Shares. The Trustee’s liability in connection with the issuance and sale of the Shares is limitedsolely to the express obligations of the Trustee set forth in the Declaration of Trust.
The Trustee has no duty or liability to supervise or monitor the performance of the service providers to the Fund,nor does the Trustee have any liability for the acts or omissions of such service providers. The Shareholders haveno voice in the day-to-day management of the business and operations of the Fund and the Trust.
THE ADMINISTRATOR
The Trust, on behalf of the Fund, has appointed BNYM as the Administrator of the Fund and has entered into anAdministration Agreement in connection therewith (the “Administration Agreement”). BNYM, a bankingcorporation organized under the laws of the State of New York with trust powers, has an office at 2 HansonPlace, Brooklyn, New York 11217. BNYM is subject to supervision by the New York State Banking Departmentand the Board of Governors of the Federal Reserve System.
Pursuant to the Administration Agreement, the Administrator performs or supervises the performance of servicesnecessary for the operation and administration of the Fund. These services include receiving and processingorders from Authorized Participants to create and redeem Creation Units, net asset value calculations, accountingand other fund administrative services. The Administrator retains, separately for the Fund, certain financial booksand records, including Creation Unit creation and redemption books and records; Fund accounting records; booksand records regarding Gold Bullion transfers under the Gold Delivery Agreement; ledgers with respect to assets;liabilities, capital, income and expenses; the registrar; transfer journals; and related details and trading andrelated documents received from custodians.
The term of the Administration Agreement is one year from its effective date and will automatically renew foradditional one-year terms unless any party provides written notice of termination (with respect to the Fund) atleast 90 days prior to the end of any one-year term or unless earlier terminated as provided below:
• Either party terminates prior to the expiration of the initial term in the event that (i) the other party breachesany material provision of the Administration Agreement, provided that the non-breaching party giveswritten notice of such breach to the breaching party and the breaching party does not cure such violationwithin 90 days of receipt of such notice; (ii) a party commences as debtor any case or proceeding under anybankruptcy, insolvency or similar law, or there is commenced against such party any such case orproceeding; (iii) a party commences as debtor any case or proceeding seeking the appointment of a receiver,conservator, trustee, custodian or similar official for such party or any substantial part of its property orthere is commenced against the party any such case or proceeding; (iv) a party makes a general assignmentfor the benefit of creditors; or (v) a party states in any medium, written, electronic or otherwise, any publiccommunication or in any other public manner its inability to pay debts as they come due.
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• The Trust may terminate the Administration Agreement prior to the expiration of the initial term upon90 days’ prior written notice in the event that the Sponsor determines to liquidate the Trust and terminate itsregistration with the SEC.
The Administrator’s monthly fees are paid by the Sponsor. The Administrator and any of its affiliates may fromtime to time purchase or sell Shares for their own accounts, as agents for their customers and for accounts overwhich they exercise investment discretion. The Administrator and any successor administrator must be aparticipant in DTC or such other securities depository as shall then be acting.
THE TRANSFER AGENT
The Trust, on behalf of the Fund, has appointed BNYM as the Transfer Agent of the Fund and has entered into aTransfer Agency and Service Agreement in connection therewith (the “Transfer Agency and ServiceAgreement”).
Pursuant to the Transfer Agency and Service Agreement, the Transfer Agent serves as the Fund’s transfer agent,dividend or distribution disbursing agent, and agent in connection with certain other activities as provided underthe Transfer Agency and Service Agreement. The Transfer Agent receives a transaction processing fee inconnection with orders from Authorized Participants to create or redeem Creation Units in the amount of $500per order. These transaction processing fees are paid directly by the Authorized Participants and not by the Fund.
The term of the Transfer Agency and Service Agreement is one year from its effective date and willautomatically renew for additional one-year terms unless any party provides written notice of termination (withrespect to the Fund) at least 90 days prior to the end of any one-year term or unless earlier terminated as providedbelow:
• Either party terminates prior to the expiration of the initial term in the event that (i) the other party breachesany material provision of the Transfer Agency and Service Agreement, provided that the non-breachingparty gives written notice of such breach to the breaching party and the breaching party does not cure suchviolation within 90 days of receipt of such notice; (ii) a party commences as debtor any case or proceedingunder any bankruptcy, insolvency or similar law, or there is commenced against such party any such case orproceeding; (iii) a party commences as debtor any case or proceeding seeking the appointment of a receiver,conservator, trustee, custodian or similar official for such party or any substantial part of its property orthere is commenced against the party any such case or proceeding; (iv) a party makes a general assignmentfor the benefit of creditors; or (v) a party states in any medium, written, electronic or otherwise, any publiccommunication or in any other public manner its inability to pay debts as they come due.
• The Fund may terminate the Transfer Agency and Service Agreement prior to the expiration of the initialterm upon 90 days’ prior written notice in the event that the Sponsor determines to liquidate the Trust or theFund and terminate its registration with the SEC other than in connection with a merger or acquisition of theTrust.
THE CUSTODIAN (CASH ONLY)
The Trust, on behalf of the Fund, has appointed BNYM to serve as the custodian of the Fund’s cash, if any, andhas entered into a Custody Agreement in connection therewith (the “BNYM Custody Agreement”).
Pursuant to the BNYM Custody Agreement, BNYM has agreed to establish and maintain one or more cashaccounts for the Fund. BNYM shall also maintain books and records segregating the assets of the Fund from theassets of any other series of the Trust. With respect to all cash held pursuant to the BNYM Custody Agreement,BNYM shall, unless otherwise instructed to the contrary, (a) receive all income and other payments and advisethe Fund as promptly as practicable of any such amounts due but not paid; and (b) endorse for collection checks,drafts or other negotiable instruments.
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The term of the BNYM Custody Agreement is one year from its effective date and will automatically renew foradditional one-year terms unless any party provides written notice of termination (with respect to the Fund) atleast 90 days prior to the end of any one-year term or unless earlier terminated as provided below:
• Either party terminates prior to the expiration of the initial term in the event that (i) the other party breachesany material provision of the BNYM Custody Agreement, provided that the non-breaching party giveswritten notice of such breach to the breaching party and the breaching party does not cure such violationwithin 90 days of receipt of such notice; (ii) a party commences as debtor any case or proceeding under anybankruptcy, insolvency or similar law, or there is commenced against such party any such case orproceeding; (iii) a party commences as debtor any case or proceeding seeking the appointment of a receiver,conservator, trustee, custodian or similar official for such party or any substantial part of its property orthere is commenced against the party any such case or proceeding; (iv) a party makes a general assignmentfor the benefit of creditors; or (v) a party states in any medium, written, electronic or otherwise, any publiccommunication or in any other public manner its inability to pay debts as they come due.
• The Trust may terminate the BNYM Custody Agreement prior to the expiration of the initial term upon90 days’ prior written notice in the event that Sponsor determines to liquidate the Trust or the Fund andterminate its registration with the SEC.
THE CUSTODIAN
HSBC Bank plc serves as the Custodian of the Fund’s Gold Bullion. HSBC Bank plc is a financial institutionregistered under the laws of England and Wales. Its London office is located at 8 Canada Square, London,E14 5HQ, United Kingdom. While the UK operations of the Custodian are regulated by the FCA in theUnited Kingdom, the custodial services provided by the Custodian are presently not a regulated activity subjectto the rules of the FCA.
The Custodian is responsible for safekeeping the Fund’s Gold Bullion. The Custodian facilitates the transfer ofGold Bullion into and out of the Fund through the unallocated Gold Bullion accounts it maintains for eachAuthorized Participant and the Gold Delivery Provider and the unallocated and allocated Gold Bullion accountsit maintains for the Fund. The Custodian is responsible for allocating specific bars of Gold Bullion to the FundAllocated Account. The Custodian provides the Fund with regular reports detailing the Gold Bullion transfersinto and out of the Fund Unallocated Account and the Fund Allocated Account and identifying the Gold Bullionbars held in the Fund Allocated Account.
The Custodian and its affiliates may from time to time purchase or sell Gold Bullion or Shares for their ownaccounts, as agents for their customers and for accounts over which they exercise investment discretion.
Unless otherwise agreed by the Fund, the Custodian will hold the Gold Bullion deposited with and held for theaccount of the Fund at its London, England vault, except when the Gold Bullion has been allocated in the vault ofa subcustodian solely for temporary custody and safekeeping. If held by a subcustodian, the Custodian has agreedthat it will use commercially reasonable efforts promptly to transport the Gold Bullion from the subcustodian’svault to the Custodian’s vault, at the Custodian’s cost and risk. The Custodian is a market maker, clearer andapproved weigher of gold under the rules of the LBMA.
The Custodian, as instructed by the Sponsor or the Fund, is authorized to accept, on behalf of the Fund, depositsof Gold Bullion in unallocated form. Acting on standing instructions given by the Sponsor or the Fund, theCustodian allocates Gold Bullion deposited in unallocated form with the Fund by selecting bars of Gold Bullionfor deposit to the Fund Allocated Account from unallocated bars which the Custodian holds or by instructing asubcustodian to allocate bars from unallocated bars held by the subcustodian. All Gold Bullion allocated to theFund must conform to the rules, regulations, practices and customs of the LBMA, and the Custodian mustreplace any non-conforming Gold Bullion with conforming Gold Bullion as soon as practical.
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The Gold Bullion bars in an allocated Gold Bullion account are specific to that account and are identified by alist which shows, for each Gold Bullion bar, the refiner, assay or fineness, serial number and gross and fineweight. Gold Bullion held in the Fund’s allocated account is the property of the Fund and is not traded, leased orloaned under any circumstances.
The Gold Bullion bars held in an unallocated account are not segregated from the Custodian’s assets. Theaccount holder therefore has no ownership interest in any specific bars of Gold Bullion that the unallocatedaccount’s bullion dealer holds or owns. The account holder is an unsecured creditor of the bullion dealer, andcredits to an unallocated account are at risk of the bullion dealer’s insolvency, in which event it may not bepossible for a liquidator to identify any Gold Bullion held in an unallocated account as belonging to the accountholder rather than to the bullion dealer.
The Trust, on behalf of the Fund, and the Custodian have entered into Custody Agreements that establish theFund Unallocated Account and the Fund Allocated Account. The Fund Unallocated Account is used for severalpurposes. First, it is used to facilitate the transfer of Gold Bullion deposits and Gold Bullion redemptiondistributions between Authorized Participants and the Fund in connection with the creation and redemption ofCreation Units. Second, the Fund Unallocated Account is also used in connection with the transfer of GoldBullion into or out of the Fund pursuant to the Gold Delivery Agreement. Finally, the Fund Unallocated Accountis used for sales of Gold Bullion to pay Fund Expenses, and when Gold Bullion is transferred into and out of theFund. The Custodian is instructed to allocate all Gold Bullion deposited with the Fund to the Fund AllocatedAccount by the close of business on each Business Day.
The Custodian is authorized to appoint from time to time one or more subcustodians to hold the Fund’s GoldBullion until it can be transported to the Custodian’s vault. In accordance with LBMA practices and customs, theCustodian does not have written custody agreements with the subcustodians it selects. This could affect therecourse of the Fund and the Custodian against any subcustodian in the event a subcustodian does not use duecare in the safekeeping of the Fund’s Gold Bullion. See “Risk Factors — The ability of the Administrator and theCustodian to take legal action against subcustodians may be limited.”
The Custodian is required to use reasonable care in selecting subcustodians and will monitor the conduct of eachsubcustodian, and promptly advise the Trust of any difficulties or problems existing with respect to suchsubcustodian. The Custodian is obliged under the Allocated Bullion Account Agreement to use commerciallyreasonable efforts to obtain delivery of Gold Bullion from those subcustodians appointed by it. Under theAllocated Bullion Account Agreement, except for an obligation on the part of the Custodian to use commerciallyreasonable efforts to obtain delivery of the Fund’s Gold Bullion bars from any subcustodians appointed by theCustodian, the Custodian is not liable for the acts or omissions, or for the solvency, of its subcustodians unlessthe selection of such subcustodians was made negligently or in bad faith.
Under the customs and practices of the London bullion market, allocated Gold Bullion is held by custodians and,on their behalf, by subcustodians under arrangements that permit each entity for which Gold Bullion is beingheld: (1) to request from the entity’s custodian (and a custodian or subcustodian to request from its subcustodian)a list identifying each Gold Bullion bar being held and the identity of the particular custodian or subcustodianholding the Gold Bullion bar and (2) to request the entity’s custodian to release the entity’s gold within twobusiness days following demand for release. Each custodian or subcustodian is obligated under the customs andpractices of the London bullion market to provide the bar list and the identification of custodians andsubcustodians referred to in (1) above, and each custodian is obligated to release gold as requested. UnderEnglish law, unless otherwise provided in any applicable custody agreement, a custodian generally is liable to itscustomer for failing to take reasonable care of the customer’s gold and for failing to release the customer’s goldupon demand.
The Custodian does not require any subcustodians to be insured or bonded with respect to their custodialactivities. The Custodian has agreed to maintain insurance in support of its custodial obligations under the
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Custody Agreements, including covering any loss of gold, on such terms and conditions as it considersappropriate. The Sponsor (so long as the Sponsor is WGC AM) and the Fund may, subject to confidentialityrestrictions, review this insurance coverage, and the Custodian annually provides the Trust with a copy of theCustodian’s certificate of insurance. The Fund is not a beneficiary of any such insurance and does not have theability to dictate the nature or amount of the coverage. Therefore, Shareholders cannot be assured that theCustodian maintains adequate insurance or any insurance with respect to the Gold Bullion held by the Custodianon behalf of the Fund.
The Custodian has agreed to permit the officers and properly designated representatives of the Trustee and theindependent public accountants for the Trust to access the Custodian’s records for the purpose of confirming thecontent of those records. Upon prior notice, any such officer or properly designated representative and anyindependent public accountant for the Trust is entitled to examine on the Custodian’s premises the Gold Bullionheld by the Custodian and the records regarding the Gold Bullion held for the account of the Custodian at asubcustodian but no more than twice per calendar year unless otherwise agreed.
Custody Agreements
The Allocated Bullion Account Agreement and the Unallocated Bullion Account Agreement between the Trust,on behalf of the Fund, and the Custodian establishes the Fund Allocated Account and the Fund UnallocatedAccount, respectively. These agreements are sometimes referred to together as the “Custody Agreements.” Thefollowing is a description of the material terms of the Custody Agreements. As the Custody Agreements aresimilar in form, they are discussed together, with material distinctions between the agreements noted.
Transfers into the Fund Unallocated Account
The Custodian credits to the Fund Unallocated Account the amount of Gold Bullion it receives from the FundAllocated Account, an Authorized Participant Unallocated Account, the Gold Delivery Provider’s unallocatedaccount or from other third-party unallocated accounts representing the right to receive Gold Bullion. Unlessotherwise agreed by the Custodian in writing, the only Gold Bullion the Custodian will accept in physical formfor credit to the Fund Unallocated Account is Gold Bullion the Administrator has transferred from the FundAllocated Account. No interest will be paid by the Custodian on any credit balance to the Fund UnallocatedAccount.
Transfers from the Fund Unallocated Account
The Custodian transfers Gold Bullion from the Fund Unallocated Account only in accordance with theAdministrator’s instructions to the Custodian. A transfer of Gold Bullion from the Fund Unallocated Accountmay only be made, (1) by transferring Gold Bullion to a third-party unallocated account, (2) by transferring GoldBullion to the Fund Allocated Account, or (3) by either (A) making Gold Bullion available for collection at theCustodian’s vault premises or at such other location as the Custodian may specify or (B), if separately agreed,delivering the Gold Bullion to such location as the Custodian and the Administrator agree at the Fund’s expenseand risk. Any Gold Bullion made available in physical form will be in a form that complies with the rules,regulations, practices and customs of the LBMA, the Bank of England or any applicable regulatory body, orCustody Rules, or in such other form as may be agreed between the Administrator and the Custodian, and in allcases will comprise one or more whole Gold Bullion bars selected by the Custodian.
The Custody Agreements provide for the full allocation of all Gold Bullion received from the AuthorizedParticipants, the Gold Delivery Provider or other third parties and credited to the Fund Unallocated Account atthe end of each Business Day. The Sponsor may establish an overdraft facility with the Custodian under whichthe Custodian may make available to the Fund Unallocated Account up to 430 fine ounces of Gold Bullion inorder to allow the Custodian to fully allocate all Gold Bullion credited to the Fund Unallocated Account to theFund Allocated Account at the end of each Business Day.
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Transfers into the Fund Allocated Account
With respect to Gold Bullion delivered by Authorized Participants, the Custodian receives transfers of GoldBullion into the Fund Allocated Account only at the Administrator’s instructions by debiting Gold Bullion fromthe Fund Unallocated Account and crediting such Gold Bullion to the Fund Allocated Account.
Transfers from the Fund Allocated Account
The Custodian transfers Gold Bullion from the Fund Allocated Account only in accordance with theAdministrator’s instructions. Generally, the Custodian transfers Gold Bullion from the Fund Allocated Accountonly by debiting Gold Bullion from the Fund Allocated Account and crediting the Gold Bullion to the FundUnallocated Account.
Withdrawals of Gold Directly from the Fund Allocated Account
Upon the Administrator’s instruction, the Custodian debits Gold Bullion from the Fund Allocated Account andmakes the Gold Bullion available for collection by the Administrator or, if separately agreed, for delivery by theCustodian in accordance with its usual practices at the Fund’s expense and risk. The Administrator and theCustodian expect that the Administrator will withdraw Gold Bullion physically from the Fund Allocated Account(rather than by crediting it to the Fund Unallocated Account and instructing a further transfer from that account)only in exceptional circumstances, such as if, for some unforeseen reason, it was not possible to transfer GoldBullion in unallocated form. The Custodian is not obliged to effect any requested delivery if, in its reasonableopinion, (1) this would cause the Custodian or its agents to be in breach of the Custody Rules or other applicablelaw, court order or regulation, (2) the costs incurred would be excessive or (3) delivery is impracticable for anyreason. When Gold Bullion is physically withdrawn from the Fund Allocated Account pursuant to theAdministrator’s instruction, all right, title, risk and interest in and to the Gold Bullion withdrawn shall pass to theperson to whom or for whose account such Gold Bullion is transferred, delivered or collected at the time therecipient or its agent acknowledges in writing its receipt of Gold Bullion. Unless the Administrator specifies thebars of Gold Bullion to be debited from the Fund Allocated Account, the Custodian is entitled to select the GoldBullion bars.
Exclusion of Liability
The Custodian will use reasonable care in the performance of its duties under the Custody Agreements and isonly responsible for any loss or damage suffered by the Fund as a direct result of any negligence, fraud, or willfuldefault on the part of the Custodian in the performance of the duties under the Custody Agreements. TheCustodian’s liability is further limited to the market value of the Gold Bullion held in the Fund AllocatedAccount and the amount of the Gold Bullion credited to the Fund Unallocated Account at the time suchnegligence, fraud, or willful default is discovered by the Custodian, provided that the Custodian promptly notifiesthe Trust of its discovery. Furthermore, the Custodian has no duty to make or take or to require any subcustodianselected by it to make or take any special arrangements or precautions beyond those required by the CustodyRules or as specifically set forth in the Custody Agreements.
In the event of a loss caused by the failure of the Custodian or a subcustodian to exercise reasonable care, theTrust, on behalf of the Fund, has the right to seek recovery from the Custodian in breach. The Custodian is notliable for any delay in performance or any non-performance of any of its obligations under the CustodyAgreements by reason of any cause beyond the Custodian’s reasonable control, including any act of God or waror terrorism, any breakdown, malfunction or failure of, or in connection with, any transmission, clearing orsettlement facilities, communication or computer facilities, any transport, port, or airport disruption, industrialaction, acts and regulations and rules of any governmental or supra national bodies or authorities or relevantregulatory or self-regulatory organizations or failure of any such body, authority or relevant regulatory or self-regulatory organization to perform its obligations for any reason.
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Indemnity
Solely out of the Fund’s assets, the Fund will indemnify the Custodian’s directors, shareholders, officers,employees, agents, affiliates and subsidiaries (each, a “Custodian Indemnified Person”) against all costs andexpenses, damages, liabilities and losses which any Custodian Indemnified Person may suffer or incur, directlyor indirectly, in connection with services provided to the Fund under the Custody Agreements, except to theextent that such sums are due directly to the Custodian’s negligence, willful default or fraud or that of suchCustodian Indemnified Person.
Termination
The Fund and the Custodian may each terminate any Custody Agreement upon 90 Business Days’ prior writtennotice. The Fund and the Custodian each may terminate any Custody Agreement immediately by written noticein the event either party determines in its commercially reasonable opinion the existence of the presentation of awinding-up order, bankruptcy or analogous event in relation to the other party. If either the Allocated BullionAccount Agreement or the Unallocated Bullion Account Agreement is terminated, the other agreementautomatically terminates.
THE GOLD DELIVERY PROVIDER AND THE GOLD DELIVERY AGREEMENT
The Fund has entered into the Gold Delivery Agreement with Merrill Lynch International. Merrill LynchInternational is referred to herein as the Gold Delivery Provider. Pursuant to the terms of the Gold DeliveryAgreement, the Gold Delivery Provider has agreed to deliver to (and receive from) the Fund Gold Bullion inamounts intended to reflect the change in the performance of the Fund’s holdings of Gold Bullion on eachBusiness Day as though they had been denominated in the Reference Currencies comprising the FX Basket inaccordance with the respective weights of such Reference Currencies comprising the FX Basket. This process isdiscussed in more detail in the section “Operation of the Fund.”
More information about Merrill Lynch International, the Gold Delivery Provider and subsidiary of Bank of AmericaCorporation, may also be found on the SEC’s EDGAR website under CIK No. 0000070858 (for Bank of AmericaCorporation). Bank of America Corporation consolidates the financial statements of each of its subsidiaries,including Merrill Lynch International, with its own. Bank of America Corporation will guarantee the paymentobligation of Merrill Lynch International under the Gold Delivery Agreement. Please note that none of the Trust,the Sponsor or the Marketing Agent has undertaken any independent review of or due diligence on the content orinformation contained on any third-party website, including with respect to any financial statements.
The Fund has agreed to indemnify the Gold Delivery Provider for all losses arising from third-party claims forany alleged untrue statement of a material fact in the Trust’s registration statement. The Gold DeliveryAgreement may be terminated by either party after an initial term of two and a half years. The agreement canalso be terminated earlier or on shorter notice if certain litigation, regulatory, and other contingencies or defaultsunder the agreement occur. The Gold Delivery Agreement requires that, at least six months prior to the end of theInitial Term, the parties attempt in good faith to agree to the terms and conditions of a new Gold DeliveryAgreement or other agreement between the parties for the provision of services relating to the Fund. OnSeptember 11, 2018, the Trust and the Gold Delivery Provider entered into an amendment to the Gold DeliveryAgreement that extended the term of the Gold Delivery Agreement until June 2022.
The Gold Delivery Agreement comes within the CEA’s definition of a “swap” as set forth in Section 1a(47) ofthe CEA and the rules promulgated thereunder. As a result, the transactions pursuant to the Gold DeliveryAgreement may be deemed a commodity interest under the CEA and a “swap” for these purposes. Based on thisanalysis, the approximate percentage of the Fund’s assets subject to treatment as commodity interests ispotentially 100%. However, this amount is expected to be much lower on a daily basis as only a small percentageof the Fund’s assets (i.e., the amount equivalent to the change in value of the Reference Currencies comprisingthe FX Basket against the USD) would move into or out of the Fund on any day pursuant to the Gold DeliveryAgreement.
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Because the Gold Delivery Agreement comes within the CEA’s “swap” definition, the Fund is subject to thejurisdiction of the CFTC. The Gold Delivery Agreement is a negotiated, bilateral contract for delivery of physicalGold Bullion; it is not traded on an organized exchange and the Gold Bullion delivered pursuant to the GoldDelivery Agreement will not be cleared by a clearing organization.
The Sponsor is the Commodity Pool Operator of the Fund and is registered in such capacity with the CFTC andis registered as a member of the National Futures Association. As a registered Commodity Pool Operator, theSponsor is subject to certain disclosure requirements of the CFTC and is required to provide the CFTC withcertain records and reports. A portion of the fee paid to the Sponsor by the Fund is used by the Sponsor for itscompliance with CFTC rules and regulations.
THE MARKETING AGENT
The Sponsor has appointed State Street Global Advisors Funds Distributors, LLC as the Marketing Agent of theTrust and has entered into the Marketing Agent Agreement in connection therewith. State Street Global AdvisorsFunds Distributors, LLC, a Delaware limited liability company and a wholly-owned subsidiary of State StreetCorporation, has an office at 1 Iron Street, Boston, Massachusetts 02210.
The Marketing Agent and its affiliates may from time to time become Authorized Participants or purchase or sellgold or Shares for their own account, as agent for their customers and for accounts over which they exerciseinvestment discretion.
Pursuant to the Marketing Agent Agreement, the Marketing Agent is responsible for marketing the Fund and theShares on a continuous basis. Among other things, the Marketing Agent will assist the Sponsor in: (1) developinga marketing plan for the Fund on an ongoing basis; (2) preparing marketing materials regarding the Shares,including the content on the Fund’s website; (3) executing the marketing plan for the Fund; (4) conducting publicrelations activities related to the marketing of Shares; and (5) incorporating gold into its strategic and tacticalexchange-traded fund research.
The Sponsor has agreed to indemnify the Marketing Agent, its partners, stockholders, members, directors,officers and employees and any affiliate of the foregoing, and their successors and assigns, against any loss,damage, expense, liability or claim that may be incurred by the Marketing Agent in connection with (1) anyuntrue statement or alleged untrue statement of a material fact contained in the registration statement of whichthis Prospectus forms a part or any omission or alleged omission to state a material fact required to be statedtherein or necessary to make the statements therein not misleading, (2) any untrue statement or alleged untruestatement of a material fact made by the Sponsor with respect to any representations and warranties or anycovenants under the Marketing Agent Agreement, or failure of the Sponsor to perform any agreement orcovenant therein, (3) any untrue statement or alleged untrue statement of a material fact contained in anymaterials used in connection with the marketing of the Shares, (4) circumstances surrounding the third partyallegations relating to patent and contract disputes, or (5) the Marketing Agent’s performance of its duties underthe Marketing Agent Agreement, except in the case of this clause (5), for any loss, damage, expense, liability orclaim resulting from the gross negligence or willful misconduct of the Marketing Agent.
The Marketing Agent Agreement will continue in effect until July 16, 2022 and automatically renew foradditional two-year terms unless earlier terminated in accordance with the terms of the Marketing AgentAgreement. The Marketing Agent’s monthly fees are paid by the Sponsor.
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Description of the Shares
GENERAL
The beneficial interest in the Trust is divided into multiple Series. The Fund is one such Series. Each Share of aSeries of the Trust represents an equal beneficial interest in the net assets of such Series, and each holder ofShares of a Series is entitled to receive such holder’s pro rata share of distributions of income and capital gains, ifany, made with respect to such Series. Upon redemption of the Shares of any Series, the applicable Shareholderwill be paid solely out of the funds and property of such Series of the Trust. All Shares are fully paid andnon-assessable.
SHARE SPLITS
If the Sponsor believes that the per Share price in the secondary market for Shares has fallen outside a desirabletrading price range, the Sponsor may cause the Fund to declare a split or reverse split in the number of Sharesoutstanding and to make a corresponding change in the number of Shares constituting a Creation Unit.
DISTRIBUTIONS
No Share has any priority or preference over any other Share of the same Series with respect to dividends ordistributions of the Trust or otherwise. All dividends and distributions will be made ratably among allShareholders of a Series from the assets held with respect to such Series according to the number of Shares ofsuch Series held of record by such Shareholders on the record date for any dividend or distribution or on the dateof termination of the Trust, as the case may be.
VOTING AND APPROVALS
Under the Declaration of Trust, Shareholders have no voting rights except as the Sponsor may consider desirableand so authorize in its sole discretion.
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The Securities Depository; Book-Entry-Only System; Global Security
DTC acts as securities depository for the Shares. DTC is a limited-purpose trust company organized under thelaws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within themeaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to theprovisions of Section 17A of the Exchange Act. DTC was created to hold securities of DTC Participants and tofacilitate the clearance and settlement of transactions in such securities among the DTC Participants throughelectronic book-entry changes. This eliminates the need for physical movement of securities certificates. DTCParticipants include securities brokers and dealers, banks, trust companies, clearing corporations, and certainother organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is alsoavailable to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodialrelationship with a DTC Participant, either directly or indirectly. DTC is expected to agree with and represent tothe DTC Participants that it will administer its Book-Entry System in accordance with its rules and bylaws andthe requirements of law.
Individual certificates are not issued for the Shares. Instead, one or more global certificates will be signed by theAdministrator and the Sponsor on behalf of the Fund, registered in the name of Cede & Co., as nominee forDTC, and deposited with the Administrator on behalf of DTC. The global certificates will evidence all of theShares outstanding at any time. The representations, undertakings and agreements made on the part of the Fundin the global certificates are made and intended for the purpose of binding only the Fund and not theAdministrator or the Sponsor individually.
Upon the settlement date of any creation, transfer or redemption of Shares, DTC will credit or debit, on its book-entry registration and transfer system, the amount of the Shares so created, transferred or redeemed to theaccounts of the appropriate DTC Participants. The Administrator and the Authorized Participants will designatethe accounts to be credited and charged in the case of creation or redemption of Shares.
Beneficial ownership of the Shares will be limited to DTC Participants, Indirect Participants and persons holdinginterests through DTC Participants and Indirect Participants. Owners of beneficial interests in the Shares areshown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect toDTC Participants), the records of DTC Participants (with respect to Indirect Participants), and the records ofIndirect Participants (with respect to Shareholders that are not DTC Participants or Indirect Participants).Shareholders are expected to receive from or through the DTC Participant maintaining the account through whichthe Shareholder has purchased their Shares a written confirmation relating to such purchase.
Shareholders that are not DTC Participants may transfer the Shares through DTC by instructing the DTCParticipant or Indirect Participant through which the Shareholders hold their Shares to transfer the Shares.Shareholders that are DTC Participants may transfer the Shares by instructing DTC in accordance with the rulesof DTC. Transfers will be made in accordance with standard securities industry practice.
DTC may decide to discontinue providing its service with respect to Creation Units and/or the Shares by givingnotice to the Administrator and the Sponsor. Under such circumstances, the Administrator and the Sponsor willeither find a replacement for DTC to perform its functions at a comparable cost or, if a replacement isunavailable, terminate the Fund.
The rights of the Shareholders generally must be exercised by DTC Participants acting on their behalf inaccordance with the rules and procedures of DTC. Because the Shares can only be held in book-entry formthrough DTC and DTC Participants, investors must rely on DTC, DTC Participants and any other financialintermediary through which they hold the Shares to receive the benefits and exercise the rights described in thissection. Investors should consult with their broker or financial institution to find out about procedures andrequirements for securities held in book-entry form through DTC.
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Determination of NAV
The Administrator determines the NAV of Shares of the Fund on each Business Day. The NAV of Shares of theFund is the aggregate value of the Fund’s assets (which include gold payable, but not yet delivered, to the Fund)less its liabilities (which include accrued but unpaid fees and expenses). The NAV of the Fund is calculatedbased on the price of gold per ounce applied against the number of ounces of Gold Bullion owned by the Fund.For purposes of calculating NAV, the number of ounces of Gold Bullion (i) is adjusted up or down on a dailybasis to reflect the Gold Delivery Amount; and (ii) reflects the amount of Gold Bullion delivered into (or out of)the Fund on a daily basis by Authorized Participants creating and redeeming Shares. The number of ounces ofGold Bullion held by the Fund is adjusted downward by the Sponsor’s fee and the expenses of the Gold DeliveryAgreement.
In determining the Fund’s NAV, the Administrator generally values the Gold Bullion based on the LBMA GoldPrice AM for an ounce of gold. If no LBMA Gold Price AM is made on a particular evaluation day or if theLBMA Gold Price PM has not been announced by 12:00 p.m. New York time on a particular evaluation day(including a Business Day that is not an Index Business Day), the next most recent LBMA Gold Price AM isused generally in the determination of the NAV of the Fund, unless the Sponsor determines that such price isinappropriate to use as the basis for such determination. If the Sponsor determines that such price is inappropriateto use, it shall identify an alternate basis for evaluation of the Gold Bullion held by the Fund. In such case, theSponsor would, for example, look to the current trading price of gold from other reported sources, such as dealerquotes, broker quotes or electronic trading data, to value the Fund’s Shares.
The NAV generally is calculated as of 12:00 p.m. New York time on any Business Day. The Administrator alsodetermines the NAV per Share. The general role, responsibilities and regulation of the Administrator are furtherdescribed in “Description of Key Service Providers — The Administrator.”
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Creation and Redemption of Shares
The Fund creates and redeems Shares from time to time, but only in one or more Creation Units (a Creation Unitequals a block of 1,000 Shares). The creation and redemption of Creation Units is only made in exchange for thedelivery to the Fund or the distribution by the Fund of the amount of Gold Bullion represented by the CreationUnits being created or redeemed. The amount of Gold Bullion required to be delivered to the Fund in connectionwith any creation, or paid out upon redemption, is based on the combined NAV of the number of Shares includedin the Creation Units being created or redeemed as determined on the day the order to create or redeem CreationUnits is properly received and accepted (as adjusted for any Market Disruption Event or Extraordinary Event).
Authorized Participants are the only persons that may place orders to create and redeem Creation Units. Tobecome an Authorized Participant, a person must enter into a Participant Agreement with the Administrator. TheParticipant Agreement and the related procedures attached thereto may be amended by the Administrator and theSponsor without the consent of any Shareholder or Authorized Participant. Authorized Participants who makedeposits with the Fund in exchange for Creation Units receive no fees, commissions or other form ofcompensation or inducement of any kind from either the Sponsor or the Fund, and no such person has anyobligation or responsibility to the Sponsor or the Fund to effect any sale or resale of Shares. Currently, theAuthorized Participants are Goldman, Sachs & Co., J.P. Morgan Securities, Inc., Merrill Lynch ProfessionalClearing Corp., Morgan Stanley & Co. LLC, UBS Securities LLC, and Virtu Financial BD, LLC.
Prior to initiating any creation or redemption order, an Authorized Participant must have entered into anagreement with the Custodian to establish an Authorized Participant Unallocated Account in London. AuthorizedParticipant Unallocated Accounts may only be used for transactions with the Fund. An unallocated account is anaccount with a bullion dealer, which may also be a bank, to which a fine weight amount of Gold Bullion iscredited. Transfers to or from an unallocated account are made by crediting or debiting the number of ounces ofGold Bullion being deposited or withdrawn. The account holder is entitled to direct the bullion dealer to deliveran amount of physical Gold Bullion equal to the amount of Gold Bullion standing to the credit of the unallocatedaccount holder. Gold Bullion held in an unallocated account is not segregated from the Custodian’s assets. Theaccount holder therefore has no ownership interest in any specific bars of Gold Bullion that the bullion dealerholds or owns. The account holder is an unsecured creditor of the bullion dealer, and credits to an unallocatedaccount are at risk of the bullion dealer’s insolvency, in which event it may not be possible for a liquidator toidentify any Gold Bullion held in an unallocated account as belonging to the account holder rather than to thebullion dealer.
Certain Authorized Participants are able to participate directly in the Gold Bullion market and the gold futuresmarket. In some cases, an Authorized Participant may from time to time acquire gold from or sell gold to itsaffiliated gold trading desk, which may profit in these instances. The Sponsor believes that the size and operationof the Gold Bullion market make it unlikely that an Authorized Participant’s direct activities in the gold orsecurities markets will affect the price of gold or the price of the Shares. Authorized Participants must be DTCParticipants and must be registered as broker-dealers under the Exchange Act, and regulated by FINRA, or mustbe exempt from being or otherwise must not be required to be so regulated or registered, and must be qualified toact as brokers or dealers in the states or other jurisdictions where the nature of their business so requires. EachAuthorized Participant will have its own set of rules and procedures, internal controls and information barriers asit determines is appropriate in light of its own regulatory regime.
Authorized Participants may act for their own accounts or as agents for broker-dealers, custodians and othersecurities market participants that wish to create or redeem Creation Units. An order for one or more CreationUnits may be placed by an Authorized Participant on behalf of multiple clients. Persons interested in purchasingCreation Units should contact the Sponsor or the Administrator to obtain the contact information for theAuthorized Participants. Shareholders who are not Authorized Participants will only be able to redeem theirShares through an Authorized Participant.
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All Gold Bullion must be delivered by Authorized Participants to the Fund and distributed by the Fund inunallocated form through credits and debits between Authorized Participant Unallocated Accounts and the FundUnallocated Account.
All Gold Bullion must be of at least a minimum fineness (or purity) of 995 parts per 1,000 (99.5%) and otherwiseconform to the rules, regulations, practices and customs of the LBMA, including the specifications for a LondonGood Delivery Bar.
Under the Participant Agreement with respect to each Authorized Participant, the Sponsor has agreed toindemnify the Authorized Participants against certain liabilities, including liabilities under the Securities Act, andto contribute to the payments the Authorized Participants may be required to make in respect of those liabilities.
The following description of the procedures for the creation and redemption of Creation Units is only a summaryand investors should review the description of the procedures for the creation and redemption of Creation Unitsset forth in the Declaration of Trust, the Administration Agreement, the form of Participant Agreement and theform of Participant Unallocated Bullion Account Agreement, each of which has been filed as an exhibit to thisregistration statement of which this Prospectus is a part.
CREATION PROCEDURES
On any Business Day, an Authorized Participant may place an order with the Administrator to create one or moreCreation Units. Purchase orders must be placed by 5:30 p.m. ET. The day on which the Administrator receives avalid purchase order is the purchase order date. By placing a purchase order, an Authorized Participant agrees todeposit Gold Bullion with the Fund, as described below. Prior to the delivery of Creation Units for a purchaseorder, the Authorized Participant must also have wired to the Administrator the non-refundable transaction feedue for the purchase order.
DETERMINATION OF REQUIRED DEPOSITS
The total deposit required to create each Creation Unit is referred to as the Creation Unit Gold Delivery Amount.The Creation Unit Gold Delivery Amount is the number of ounces of Gold Bullion required to be delivered to theFund by an Authorized Participant in connection with a creation order for a single Creation Unit. The CreationUnit Gold Delivery Amount will be determined on the Business Day following the date such creation order isaccepted (as adjusted by any Market Disruption Event or Extraordinary Event). It is calculated by multiplying thenumber of Shares in a Creation Unit by the number of ounces of Gold Bullion associated with Fund Shares onthe Business Day after the day the creation order is accepted.
DELIVERY OF REQUIRED DEPOSITS
An Authorized Participant who places a purchase order is responsible for crediting its Authorized ParticipantUnallocated Account with the required Gold Bullion deposit amount by the end of the second Business Day inLondon following the purchase order date. Upon receipt of the Gold Bullion deposit amount, the Custodian, afterreceiving appropriate instructions from the Authorized Participant and the Administrator, will transfer on thesecond Business Day following the purchase order date the Gold Bullion deposit amount from the AuthorizedParticipant Unallocated Account to the Fund Unallocated Account and the Administrator will direct DTC tocredit the number of Creation Units ordered to the Authorized Participant’s DTC account. The expense and riskof delivery, ownership and safekeeping of Gold Bullion until such Gold Bullion has been received by the Fundwill be borne solely by the Authorized Participant. If Gold Bullion is to be delivered other than as describedabove, the Sponsor is authorized to establish such procedures and to appoint such custodians and establish suchcustody accounts as the Sponsor determines to be desirable.
Acting on standing instructions given by the Administrator, the Custodian will transfer the Gold Bullion depositamount from the Fund Unallocated Account to the Fund Allocated Account by allocating to the Fund Allocated
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Account specific bars of Gold Bullion which the Custodian holds or instructing a subcustodian to allocatespecific bars of Gold Bullion held by or for the subcustodian. The Gold Bullion bars in an allocated Gold Bullionaccount are specific to that account and are identified by a list which shows, for each Gold Bullion bar, therefiner, assay or fineness, serial number and gross and fine weight. Gold Bullion held in the Fund’s allocatedaccount is the property of the Fund and is not traded, leased or loaned under any circumstances.
The Custodian will use commercially reasonable efforts to complete the transfer of Gold Bullion to the FundAllocated Account prior to the time by which the Administrator is to credit the Creation Unit to the AuthorizedParticipant’s DTC account; if, however, such transfers have not been completed by such time, the number ofCreation Units ordered will be delivered against receipt of the Gold Bullion deposit amount in the FundUnallocated Account, and all Shareholders will be exposed to the risks of unallocated Gold Bullion to the extentof that Gold Bullion deposit amount until the Custodian completes the allocation process. See “Risk Factors —Gold Bullion held in the Fund’s unallocated Gold Bullion account and any Authorized Participant’s unallocatedGold Bullion account will not be segregated from the Custodian’s assets.”
REJECTION OF PURCHASE ORDERS
The Fund has the right, but not the obligation, to reject a purchase order if (i) the order is not in proper form asdescribed in the Participant Agreement, (ii) the fulfillment of the order, in the opinion of its counsel, might beunlawful, (iii) if the Fund determines that acceptance of the order from an Authorized Participant would exposethe Fund to credit risk; or (iv) circumstances outside the control of the Administrator, the Sponsor or theCustodian make the purchase, for all practical purposes, not feasible to process.
REDEMPTION PROCEDURES
The procedures by which an Authorized Participant can redeem one or more Creation Units mirror theprocedures for the creation of Creation Units. On any Business Day, an Authorized Participant may place anorder with the Administrator to redeem one or more Creation Units. Redemption orders must be placed by5:30 p.m. ET. A redemption order so received is effective on the date it is received in satisfactory form by theAdministrator. The day on which the Administrator receives a valid redemption order is the redemption orderdate.
DETERMINATION OF REDEMPTION DISTRIBUTION
The redemption distribution from the Fund consists of a credit to the redeeming Authorized Participant’sAuthorized Participant Unallocated Account in the amount of the Creation Unit Gold Delivery Amount. TheCreation Unit Gold Delivery Amount for redemptions is the number of ounces of Gold Bullion held by the Fundto be paid out upon redemption of a Creation Unit. The Sponsor anticipates that in the ordinary course of theFund’s operations there will be no cash distributions made to Authorized Participants upon redemptions. Inaddition, because the Gold Bullion to be paid out in connection with the redemption order will decrease theamount of Gold Bullion subject to the Gold Delivery Agreement, the Creation Unit Gold Delivery Amountreflects the cost to the Gold Delivery Provider of resizing (i.e., decreasing) its positions so that it can fulfill itsobligations under the Gold Delivery Agreement.
DELIVERY OF REDEMPTION DISTRIBUTION
The redemption distribution due from the Fund is delivered to the Authorized Participant on the third BusinessDay following the redemption order date if, by 10:00 A.M. New York time on such third Business Day, theAdministrator’s DTC account has been credited with the Creation Units to be redeemed. The Custodian transfersthe redemption Gold Bullion amount from the Fund Allocated Account to the Fund Unallocated Account and,thereafter, to the redeeming Authorized Participant’s Authorized Participant Unallocated Account. TheAuthorized Participant and the Fund are each at risk in respect of Gold Bullion credited to their respective
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unallocated accounts in the event of the Custodian’s insolvency. See “Risk Factors — Gold held in the Fund’sunallocated Gold account and any Authorized Participant’s unallocated Gold account will not be segregated fromthe Custodian’s assets.”
SUSPENSION OR REJECTION OF REDEMPTION ORDERS
The Fund may, in its discretion, and will when directed by the Sponsor, suspend the right of redemption, orpostpone the redemption settlement date: (1) for any period during which NYSE Arca is closed other thancustomary weekend or holiday closings, or trading on NYSE Arca is suspended or restricted, (2) for any periodduring which an emergency exists as a result of which delivery, disposal or evaluation of Gold Bullion is notreasonably practicable, or (3) for such other period as the Sponsor determines to be necessary for the protectionof the Shareholders.
The Fund has the right, but not the obligation, to reject a redemption order if (i) the order is not in proper form asdescribed in the Participant Agreement, (ii) the fulfillment of the order, in the opinion of its counsel, might beunlawful, (iii) if the Fund determines that acceptance of the order from an Authorized Participant would exposethe Fund to credit risk, or (iv) circumstances outside the control of the Administrator, the Sponsor or theCustodian make the redemption, for all practical purposes, not feasible to process.
The Sponsor will not be liable to any person or liable in any way for any loss or damages that may result fromany such suspension, postponement or rejection.
CREATION AND REDEMPTION TRANSACTION FEE
An Authorized Participant is required to pay a transaction fee of $500 per order to create or redeem CreationUnits. An order may include multiple Creation Units. The transaction fee may be changed from time to time atthe sole discretion of the Sponsor and upon written notice to the Authorized Participant, which notice may beprovided by disclosure in the Fund’s prospectus.
TAX RESPONSIBILITY
Authorized Participants are responsible for any transfer tax, sales or use tax, recording tax, value added tax orsimilar tax or governmental charge applicable to the creation or redemption of Creation Units, regardless ofwhether such tax or charge is imposed directly on the Authorized Participants, and agree to indemnify theSponsor, the Administrator and the Fund if they are required by law to pay any such tax, together with anyapplicable penalties, additions to tax or interest thereon.
LIABILITY
No Shareholder of the Fund shall be subject in such capacity to any personal liability whatsoever to any person inconnection with the Fund’s property or the acts, obligations or affairs of the Fund. Shareholders shall have thesame limitation of personal liability as is extended to stockholders of a private corporation for profit incorporatedunder the Delaware General Corporation Law.
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Trading of Fund Shares
Fund Shares are listed on NYSE Arca under the ticker symbol GLDW. Fund Shares may be bought and sold inthe secondary market throughout the trading day like other publicly traded securities. While the Fund’s Sharesare issued in Creation Units at NAV, Shares traded in the secondary market may trade at prices that are lower orhigher than their NAV per Share. The amount of the discount or premium in the trading price relative to the NAVper Share is a function of supply and demand, among other things, and may be influenced by non-concurrenttrading hours between NYSE Arca and the COMEX, London, Zurich and Singapore. While the Shares will tradeon NYSE Arca until 4:00 p.m., ET, liquidity in the global gold market will be reduced after the close of theCOMEX at 1:30 p.m., ET. As a result, after 1:30 p.m., ET, trading spreads, and the resulting premium ordiscount, on the Shares may widen.
Most retail investors purchase and sell Shares through traditional brokerage or other intermediary accounts.Purchases or sales of Shares in the secondary market, which will not involve the Fund, may be subject tocustomary brokerage commissions. Investors are encouraged to review the terms of their brokerage accounts forapplicable charges.
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Market Disruption Events and Extraordinary Events
From time to time, unexpected events may cause the calculation of the Index and/or the operation of the Fund tobe disrupted. These events are expected to be relatively rare, but there can be no guarantee that these events willnot occur. These events are referred to as either “Market Disruption Events” or “Extraordinary Events”depending largely on their significance and potential impact to the Index and Fund. Market Disruption Eventsgenerally include disruptions in the trading of gold or the Reference Currencies comprising the FX Basket, delaysor disruptions in the publication of the LBMA Gold Price or the Reference Currency prices, and unusual marketor other events that are tied to either the trading of gold or the Reference Currencies comprising the FX Basket orotherwise have a significant impact on the trading of gold or the Reference Currencies comprising the FX Basket.For example, market conditions or other events which result in a material limitation in, or a suspension of, thetrading of physical gold generally would be considered Market Disruption Events, as would material disruptionsor delays in the determination or publication of the LBMA Gold Price AM. Similarly, market conditions whichprevent, restrict or delay the Gold Delivery Provider’s ability to convert a Reference Currency to USDs or delivera Reference Currency through customary channels generally would be considered a Market Disruption Event, aswould material disruptions or delays in the determination or publication of WMR spot prices for any ReferenceCurrency comprising the FX Basket. The complete definition of a Market Disruption Event is set forth below.
A “Market Disruption Event” occurs if either an “FX Basket Disruption Event” or a “Gold Disruption Event”occurs.
An “FX Basket Disruption Event” occurs if any of the following exist on any Index Business Day with respect tothe Reference Currencies comprising the FX Basket:
(i) an event, circumstance or cause (including, without limitation, the adoption of or any change in anyapplicable law or regulation) that has had or would reasonably be expected to have a materially adverseeffect on the availability of a market for converting such Reference Currency to US Dollars (or viceversa), whether due to market illiquidity, illegality, the adoption of or change in any law or otherregulatory instrument, inconvertibility, establishment of dual exchange rates or foreign exchangecontrols or the occurrence or existence of any other circumstance or event, as determined by the IndexSponsor; or
(ii) the failure of Reuters to announce or publish the relevant spot exchange rates for any ReferenceCurrency in the FX Basket; or
(iii) any event or any condition that (I) results in a lack of liquidity in the market for trading any ReferenceCurrency that makes it impossible or illegal for market participants (a) to convert from one currency toanother through customary commercial channels, (b) to effect currency transactions in, or to obtainmarket values of, such, currency, (c) to obtain a firm quote for the related exchange rate, or (d) toobtain the relevant exchange rate by reference to the applicable price source; or (II) leads to anygovernmental entity imposing rules that effectively set the prices of any of the currencies; or
(iv) the declaration of (a) a banking moratorium or the suspension of payments by banks, in either case, inthe country of any currency used to determine any Reference Currency exchange rate, or (b) capitaland/or currency controls (including, without limitation, any restriction placed on assets in ortransactions through any account through which a non-resident of the country of any currency used todetermine the currency exchange rate may hold assets or transfer monies outside the country of thatcurrency, and any restriction on the transfer of funds, securities or other assets of market participantsfrom, within or outside of the country of any currency used to determine the applicable exchange rate.
A “Gold Disruption Event” occurs if any of the following exist on any Index Business Day with respect to gold:
(i) (a) the failure of the LBMA to announce or publish the LBMA Gold Price (or the informationnecessary for determining the price of gold) on that Index Business Day, (b) the temporary orpermanent discontinuance or unavailability of the LBMA or the LBMA Gold Price; or
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(ii) the material suspension of, or material limitation imposed on, trading in Gold by the LBMA; or
(iii) an event that causes market participants to be unable to deliver gold bullion loco London under rules ofthe LBMA by credit to an unallocated account at a member of the LBMA; or
(iv) the permanent discontinuation of trading of gold on the LBMA or any successor body thereto, thedisappearance of, or of trading in, gold; or
(v) a material change in the formula for or the method of calculating the price of gold, or a material changein the content, composition or constitution of gold.
The occurrence of a Market Disruption Event for ten consecutive Index Business Days generally would beconsidered an Extraordinary Event.
Consequences of a Market Disruption or Extraordinary Event
On any Index Business Day in which a Market Disruption Event or Extraordinary Event has occurred or iscontinuing, the Index Provider generally will calculate the Index based on the following fallback procedures:(i) where the Market Disruption Event is based on the Gold Price, the Index will be kept at the same level as theprevious Index Business Day and updated when the Gold Price is no longer disrupted; (ii) where the Gold Priceis not disrupted but one of the Reference Currency prices is disrupted, the Index will be calculated in the ordinarycourse except that the disrupted Reference Currency will be kept at its value from the previous Index BusinessDay and updated when it is no longer disrupted; and (iii) if both the Gold Price and a Reference Currency priceare disrupted, the Index will be kept at the same level as the previous Index Business Day and updated when suchprices are no longer disrupted. If a Market Disruption Event has occurred and is continuing for ten (10) or moreconsecutive Index Business Days, the Index Provider will calculate a substitute price for each index componentthat is disrupted. If an Extraordinary Event has occurred and is continuing, the Index Provider shall beresponsible for making any decisions regarding the future composition of the Index and implement any necessaryadjustments that might be required.
If the LBMA Gold Price AM is unavailable during the occurrence of a Market Disruption Event or ExtraordinaryEvent, the Fund will calculate NAV using the last published LBMA Gold Price AM. If the Fund is unable tocalculate its NAV it could affect the liquidity of the Fund which could negatively affect an investor’s ability tobuy or sell Shares of the Fund. Moreover, if the Fund suspends the right of Authorized Participants to redeemshares because of its inability to calculate NAV or otherwise, the NYSE Arca may suspend trading in the Shares.
The occurrence of any Market Disruption Event or Extraordinary Event could have a material adverse impact onthe Fund and the value of an investment in the Fund. Market Disruption Events and Extraordinary Events couldalso cause secondary market trading of Shares to be disrupted or halted for short or even long periods of time. Tothe extent trading continues during a Market Disruption Event or Extraordinary Event, it is expected that tradingwould be more volatile and that Shares would trade at wider discounts or premiums to NAV.
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United States Federal Tax Consequences
The following discussion of the material United States federal income tax consequences that generally apply tothe purchase, ownership and disposition of Shares by a “U.S. Shareholder” (as defined below), and certainUnited States federal income, gift and estate tax consequences that may apply to an investment in Shares by a“Non-U.S. Shareholder” (as defined below). The following discussion represents, insofar as it describesconclusions as to U.S. federal tax law and subject to the limitations and qualifications described therein, theopinion of Morgan, Lewis & Bockius LLP, special federal income tax counsel to the Sponsor. The discussionbelow is based on the United States Internal Revenue Code of 1986, as amended (the “Code”), TreasuryRegulations promulgated under the Code and judicial and administrative interpretations of the Code, all as ineffect on the date of this Prospectus; no assurance can be given that future legislation, regulations, courtdecisions and/or administrative pronouncements will not significantly change applicable law and materiallyaffect the conclusions expressed herein, and any such change, even though made after a Shareholder has investedin the Fund, could be applied retroactively.
The tax treatment of Shareholders may vary depending upon their own particular circumstances. CertainShareholders — including banks, thrift institutions and certain other financial institutions, insurance companies,tax-exempt organizations, brokers and dealers in securities or currencies, certain securities traders, personsholding Shares as a position in a “hedging,” “straddle,” “conversion” or “constructive sale” transaction (as thoseterms are defined in the authorities mentioned above), qualified pension and profit-sharing plans, individualretirement accounts (IRAs), certain other tax-deferred accounts, U.S. expatriates, persons whose “functionalcurrency” is not the U.S. dollar, persons subject to the federal alternative minimum tax, foreign Shareholders(except as specifically provided under “Income Taxation of Non-U.S. Shareholders” and “Estate and Gift TaxConsiderations for Non-U.S. Shareholders” below) and other Shareholders with special circumstances — may besubject to special rules not discussed below. In addition, the following discussion applies only to investors whohold Shares as “capital assets” within the meaning of Code section 1221. This discussion does not purport to becomplete or to deal with all aspects of federal income taxation that may be relevant to an investor in light of itsparticular circumstances. Moreover, the discussion below does not address the effect of any state, local or foreigntax law on an owner of Shares. Purchasers of Shares are urged to consult their own tax advisors with respect toall federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares.
For purposes of this discussion, a “U.S. Shareholder” is a Shareholder that is:
• An individual who is treated as a citizen or resident of the United States for U.S. federal income taxpurposes;
• A business entity treated as a corporation or partnership (or other entity treated as such for those purposes)for U.S. federal income tax purposes that is created or organized in or under the laws of the United States orany political subdivision thereof;
• An estate, the income of which is includible in gross income for U.S. federal income tax purposes regardlessof its source; or
• A trust, if a court within the United States is able to exercise primary supervision over the administration ofthe trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.
A Shareholder that is not a U.S. Shareholder as defined above is generally considered a “Non-U.S. Shareholder”for purposes of this discussion. For United States federal income tax purposes, the treatment of any beneficialowner of an interest in a partnership, including any entity treated as a partnership for United States federalincome tax purposes, will generally depend upon the status of the partner and upon the activities of thepartnership. Partnerships and partners in partnerships are urged to consult their tax advisors about theUnited States federal income tax consequences of purchasing, owning and disposing of Shares.
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TAXATION OF THE FUND
The Fund should be treated as a “grantor trust” for federal income tax purposes. There can be no assurance thatthe Internal Revenue Service (“IRS”) will agree with that treatment, and it is possible that the IRS or another taxauthority could assert a position contrary thereto and that a court could sustain that contrary position. If the Fundwere found not to be taxable as a “grantor trust,” it would likely be taxable as a partnership (and not a publiclytraded partnership taxed as an association) for U.S. federal income tax purposes and would be required toforward IRS Form K-1s to Fund Shareholders. It is not expected that the tax consequences to the Fund’sShareholders would differ materially if the Fund were to be treated as a partnership. The balance of thisdisclosure assumes that the Fund will be treated as a “grantor trust” for U.S. federal income tax purposes.
As a “grantor trust” for U.S. federal income tax purposes, neither the Trust nor the Fund itself will pay U.S.federal income tax. Instead, the income and expenses of the Fund “flow through” to the Fund’s Shareholders, andthe Administrator will report the Fund’s income, gains, losses and deductions to the IRS on that basis.
TAXATION OF U.S. SHAREHOLDERS
Shareholders generally will be treated, for U.S. federal income tax purposes, as if they directly owned a pro ratashare of the underlying assets held in the Fund. Shareholders also will be treated as if they directly received theirrespective pro rata shares of the Fund’s income, if any, regardless of whether they receive any distributions fromthe Fund. Shareholders will also be treated as if they directly incurred their respective pro rata shares of theFund’s expenses. In the case of a Shareholder that purchases Shares for cash, its initial tax basis in its pro ratashare of the assets held in the Fund at the time it acquires its Shares will be equal to its cost of acquiring theShares. In the case of a Shareholder that acquires its Shares by delivering Gold Bullion to the Fund, the deliveryof Gold Bullion to the Fund in exchange for the underlying Gold Bullion represented by the Shares will not be ataxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s prorata share of the Gold Bullion held in the Fund will be the same as its tax basis and holding period for the GoldBullion delivered in exchange therefor. For purposes of this discussion, it is assumed that all of a Shareholder’sShares are acquired on the same date, at the same price per Share and, except where otherwise noted, that the soleasset of the Fund is Gold Bullion.
When the Fund sells Gold Bullion, for example to pay expenses (including delivery by the Fund of Gold Bullionpursuant to the Gold Delivery Agreement), a Shareholder generally will recognize gain or loss in an amountequal to the difference between (1) the Shareholder’s pro rata share of the amount realized by the Fund upon thesale and (2) the Shareholder’s tax basis for its pro rata share of the Gold Bullion that was sold, which gain or losswill generally be long-term or short-term capital gain or loss, depending upon whether the Shareholder is treatedas having held its share of the Gold Bullion that was sold for more than one year. A Shareholder’s tax basis forits share of any Gold Bullion sold by the Fund generally will be determined by multiplying the Shareholder’stotal basis for its share of all of the Gold Bullion held in the Fund immediately prior to the sale by a fraction, thenumerator of which is the amount of Gold Bullion sold and the denominator of which is the total amount of theGold Bullion held in the Fund immediately prior to the sale. After any such sale, a Shareholder’s tax basis for itspro rata share of the Gold Bullion remaining in the Fund will be equal to its tax basis for its share of the totalamount of the Gold Bullion held in the Fund immediately prior to the sale, less the portion of such basis allocableto its share of the Gold Bullion that was sold.
Upon a Shareholder’s sale of some or all of its Shares, the Shareholder will be treated as having sold the portionof its pro rata share of the Gold Bullion held in the Fund at the time of the sale that is attributable to the Sharessold. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an amount equal to thedifference between (1) the amount realized pursuant to the sale of the Shares, and (2) the Shareholder’s tax basisfor the portion of its pro rata share of the Gold Bullion held in the Fund at the time of sale that is attributable tothe Shares sold, as determined in the manner described in the preceding paragraph.
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A redemption of some or all of a Shareholder’s Shares in exchange for the underlying Gold Bullion representedby the Shares redeemed generally will not be a taxable event to the Shareholder. The Shareholder’s tax basis forthe Gold Bullion received in the redemption generally will be the same as the Shareholder’s tax basis for theportion of its pro rata share of the Gold Bullion held in the Fund immediately prior to the redemption that isattributable to the Shares redeemed. The Shareholder’s holding period with respect to the Gold Bullion receivedshould include the period during which the Shareholder held the Shares redeemed. A subsequent sale of the GoldBullion received by the Shareholder will be a taxable event, unless a nonrecognition provision of the Codeapplies to such sale.
After any sale or redemption of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its pro ratashare of the Gold Bullion held in the Fund immediately after such sale or redemption generally will be equal toits tax basis for its share of the total amount of the Gold Bullion held in the Fund immediately prior to the sale orredemption, less the portion of such basis which is taken into account in determining the amount of gain or lossrecognized by the Shareholder upon such sale or, in the case of a redemption, which is treated as the basis of theGold Bullion received by the Shareholder in the redemption.
As noted above, the foregoing discussion assumes that all of a Shareholder’s Shares were acquired on the samedate and at the same price per Share. If a Shareholder owns multiple lots of Shares (i.e., Shares acquired ondifferent dates and/or at different prices), it is uncertain whether the Shareholder may use the “specificidentification” rules that apply under Treas. Reg. § 1.1012-1(c) in the case of sales of shares of stock, indetermining the amount, and the long-term or short-term character, of any gain or loss recognized by theShareholder upon the sale of Gold Bullion by the Fund, upon the sale of any Shares by the Shareholder, or uponthe sale by the Shareholder of any Gold Bullion received by it upon the redemption of any of its Shares. The IRScould take the position that a Shareholder has a blended tax basis and holding period for its pro rata share of theunderlying Gold Bullion in the Fund. Shareholders that hold multiple lots of Shares, or that are contemplatingacquiring multiple lots of Shares, are urged to consult their own tax advisors as to the determination of the taxbasis and holding period for the underlying Gold Bullion related to such Shares.
TREATMENT OF PAYMENTS TO AND FROM THE GOLD DELIVERY PROVIDER–SECTION 988TRANSACTION
As noted above, Shareholders will be treated as if they directly received their respective pro rata shares of theFund’s daily income or loss. Shareholders will realize income as a result of the delivery of Gold Bullion by theGold Delivery Provider to the Fund pursuant to the Gold Delivery Agreement or incur a loss as result of theFund’s obligation to deliver Gold Bullion to the Gold Delivery Provider pursuant to the Gold DeliveryAgreement. Each Shareholder will receive an increase in its tax basis for its pro rata share of the fair marketvalue of the Gold Bullion received by the Fund from the Gold Delivery Provider. The character of the income orloss will generally be determined on the basis of the particular circumstances of each Shareholder.
The maximum ordinary U.S. federal income tax rate for individuals is currently 37% and, in general, themaximum individual U.S. federal income tax rate for long-term capital gains is 20%, although in all cases theactual rates may be higher due to the phase out of certain tax deductions, exemptions and credits. For a furtherdiscussion on tax rates, please see the section below entitled “Maximum 28% Long-Term Capital Gains Tax Ratefor Non-Corporate U.S. Shareholders.” The excess of capital losses over capital gains may be offset against theordinary income of an individual taxpayer, subject to an annual deduction limitation of $3,000. For corporatetaxpayers, the maximum U.S. federal income tax rate is 21%. Capital losses of a corporate taxpayer may beoffset only against capital gains, but unused capital losses may be carried back three years (subject to certainlimitations) and carried forward five (5) years.
The Gold Delivery Agreement is likely to be classified as a “section 988 transaction” because it is a type offinancial instrument in which the amount of the payout in Gold Bullion is determined by reference to the value ofone or more “nonfunctional currencies.” Neither the Trust nor the Fund has received nor requested any written
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guidance from the IRS regarding the tax classification of the Gold Delivery Agreement as a “section 988transaction.”
Generally, gain or loss attributable to a “section 988 transaction” is ordinary rather than capital and sourced tothe country of residence of the taxpayer. There are, however, complex rules that may enable a U.S. Shareholderto elect to treat any such foreign currency gain or loss attributable to the Gold Delivery Agreement as capital gainor loss. Note there is very limited guidance with respect to the application of the section 988 rules to a “grantortrust,” such as the Fund, and there is no assurance that the IRS would respect an election made by a Shareholder(as opposed to an election by the Fund) to treat any foreign currency gain or loss as capital gain or loss. The IRS,however, has historically and continues to take the position that a “grantor trust” such as the Fund for mostpurposes is treated as inseparable from its owner or owners for U.S. federal income tax purposes. Accordingly,because a Shareholder in the Fund is deemed for federal income tax purposes to be a proportionate owner of theGold Delivery Agreement, a Shareholder may be entitled to make an election to treat any income or loss from theGold Delivery Agreement as capital gain or loss.
There are very specific requirements that must be met to satisfy the capital gain or loss election describedabove including concurrent identification requirements under applicable Treasury Regulations.Shareholders are strongly urged to consult their tax advisors prior to investing in the Fund to determinewhether they can satisfy the election requirements, to take the necessary steps to make timely elections,and to understand the tax consequences of the income or loss attributable to the Gold Delivery Agreement.Note that the Fund will not make an election to treat any foreign currency gain or loss as capital gain orloss.
MAXIMUM 28% LONG-TERM CAPITAL GAINS TAX RATE FOR NON-CORPORATE U.S.SHAREHOLDERS
Under current federal income tax law, gains recognized by non-corporate U.S. Shareholders from the sale of“collectibles,” including Gold Bullion, held for more than one year are taxed at a maximum rate of 28%, ratherthan the 20% rate applicable to most other long-term capital gains. For these purposes, gain recognized by anon-corporate U.S. Shareholder upon the sale of an interest in a trust that holds collectibles is treated as gainrecognized on the sale of collectibles, to the extent that the gain is attributable to unrealized appreciation in valueof the collectibles held by the trust. Therefore, any gain recognized by a non-corporate U.S. Shareholderattributable to a sale of Shares held for more than one year, or attributable to the Fund’s sale of any Gold Bullionwhich the Shareholder is treated (through its ownership of Shares) as having held for more than one year,generally will be taxed at a maximum federal income tax rate of 28%. The tax rates for capital gains recognizedupon the sale of assets held by a non-corporate U.S. Shareholder for one year or less or by a U.S. Shareholder aregenerally the same as those at which ordinary income is taxed.
3.8% TAX ON NET INVESTMENT INCOME
Certain U.S. Shareholders who are individuals are required to pay a 3.8% tax on the lesser of the excess of theirmodified adjusted gross income over a threshold amount ($250,000 for married persons filing jointly and$200,000 for single taxpayers) or their “net investment income,” which generally includes dividends, interest,and net gains from the disposition of investment property. This tax is in addition to any regular income taxes dueon such investment income. A similar tax will apply to certain shareholders that are estates or trusts. U.S.Shareholders are urged to consult their tax advisors regarding the effect, if any, this law may have on aninvestment in the Shares.
BROKERAGE FEES AND FUND EXPENSES
Any brokerage or other transaction fee incurred by a Shareholder in purchasing Shares will be treated as part ofthe Shareholder’s tax basis in the underlying assets of the Fund. Similarly, any brokerage fee incurred by aShareholder in selling Shares will reduce the amount realized by the Shareholder with respect to the sale.
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Shareholders will be required to recognize gain or loss upon a sale of Gold Bullion by the Fund (as discussedabove), even though some or all of the proceeds of such sale are used by the Administrator to pay Fund expenses.Shareholders may deduct their respective pro rata shares of each expense incurred by the Fund to the same extentas if they directly incurred the expense. Shareholders who are individuals, estates or trusts, however, may berequired to treat some or all of the expenses of the Fund as miscellaneous itemized deductions. Individuals maynot deduct miscellaneous itemized deductions for tax years beginning after December 31, 2017 and beforeJanuary 1, 2026. For tax years beginning before January 1, 2018 and after December 31, 2025, individuals maydeduct certain miscellaneous itemized deductions only to the extent they exceed 2% of adjusted gross income. Inaddition, such deductions may be subject to phase-outs and other limitations under applicable provisions of theCode.
INVESTMENT BY U.S. TAX-EXEMPT SHAREHOLDERS
U.S. Tax-Exempt Shareholders are subject to United States federal income tax only on their unrelated businesstaxable income (“UBTI”). Unless they incur debt in order to purchase Shares, it is expected that U.S.Tax-Exempt Shareholders should not realize UBTI in respect of income or gains from the Shares. U.S.Tax-Exempt Shareholders are urged to consult their own independent tax advisors regarding the United Statesfederal income tax consequences of holding Shares in light of their particular circumstances.
INVESTMENT BY REGULATED INVESTMENT COMPANIES
Mutual funds and other investment vehicles which are taxed as “regulated investment companies” within themeaning of section 851 of the Code are strongly urged to consult with their tax advisors concerning thelikelihood that an investment in Shares will affect their qualification as a “regulated investment company.”
INVESTMENT BY CERTAIN RETIREMENT PLANS
Code section 408(m) provides that the acquisition of a “collectible” by an IRA, or a participant-directed accountmaintained under any plan that is tax-qualified under Code section 401(a), is treated as a taxable distributionfrom the account to the owner of the IRA, or to the participant for whom the plan account is maintained, of anamount equal to the cost to the account of acquiring the collectible. The IRS has issued private letter rulingsconcluding that the purchase of shares in trusts similar to the Fund by an IRA owner or plan participant will notconstitute the acquisition of a collectible or be treated as resulting in a taxable distribution to the IRA owner orplan participant under section 408(m). However, if any of the shares so purchased are distributed from an IRA orplan account to the IRA owner or plan participant, or if any gold received by such IRA or plan account upon theredemption of any of shares purchased by it is distributed (or treated as distributed under Code section 408(m)) tothe IRA owner or plan participant, the shares or gold so distributed will be subject to federal income tax in theyear of distribution, to the extent provided under the applicable provisions of Code section 408(d), 408(m) or402. Private letter rulings are only binding on the IRS with respect to the taxpayer to which they are issued. TheFund has neither requested nor obtained such a private letter ruling. IRA owners and plan participants arestrongly urged to consult with their tax advisors before directing any such accounts to invest in the Shares sincethe acquisition of Shares may be considered a taxable distribution from the IRA. See also “ERISA and RelatedConsiderations.”
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING FOR U.S. AND NON-U.S.SHAREHOLDERS
The Administrator will file certain information returns with the IRS, and provide certain tax-related informationto Shareholders, in connection with the Fund. The Administrator will make information available that will enablebrokers and custodians through which investors hold Shares to prepare and, if required, to file certain informationreturns (e.g., Form 1099) with the IRS. To the extent required by applicable regulations, each Shareholder will beprovided with information regarding its allocable portion of the Fund’s annual income, expenses, gains andlosses (if any).
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A U.S. Shareholder may be subject to U.S. backup withholding tax in certain circumstances unless it provides itstaxpayer identification number and complies with certain certification procedures. Non-U.S. Shareholders mayhave to comply with certification procedures to establish that they are not U.S. persons, and some Non-U.S.Shareholders will be required to meet certain information reporting or certification requirements imposed by theForeign Account Tax Compliance Act (“FATCA”), in order to avoid certain information reporting and backupwithholding tax requirements.
The amount of any backup withholding will be allowed as a credit against a Shareholder’s U.S. federal incometax liability and may entitle such a Shareholder to a refund, provided that the required information is furnished tothe IRS.
INCOME TAXATION OF NON-U.S. SHAREHOLDERS
The Fund may generate taxable income as a result of receiving Gold Bullion from the Gold Delivery Providerpursuant to the Gold Delivery Agreement, recognizing gain upon disposing of Gold Bullion to satisfy itsobligation under the Gold Delivery Agreement or pursuant to any gain realized from the disposition of GoldBullion to pay other Fund expenses. As discussed above in the section entitled “Treatment of Payments to andfrom the Gold Delivery Provider — Section 988 Transaction,” neither the Trust nor the Fund has received orrequested any written guidance from the IRS regarding the tax classification of the Gold Delivery Agreement as a“section 988 transaction” or sought guidance regarding the tax implications to a “grantor trust” such as the Fundfrom engaging in a “section 988 transaction” such as the Gold Delivery Agreement. The Fund and theAdministrator intend to treat the Gold Delivery Agreement as a “section 988 transaction”; however, the IRS orother applicable authorities may take a different view than the position adopted by the Fund and theAdministrator. The Fund believes that income attributable to the Gold Delivery Agreement which may becharacterized as “foreign currency gain or loss” should be sourced outside of the U.S. to the residence of theNon-U.S. Shareholder because the Fund is an “investment trust” treated as a grantor trust and not recognized as aseparate entity for U.S. federal income tax purposes. Accordingly, any non-U.S. sourced income (including gainrecognized upon the sale or other disposition of Shares) to a Non-U.S. Shareholder should not be subject to U.S.federal income tax unless (1) the Non-U.S. Shareholder is an individual and is present in the United States for183 days or more during the taxable year of the sale or other disposition, and the gain is treated as being fromUnited States sources; or (2) the gain is effectively connected with the conduct by the Non-U.S. Shareholder of atrade or business in the United States and certain other conditions are met (and, if required by an applicableincome tax treaty, is attributable to a U.S. permanent establishment). If clause (1) of the preceding sentenceapplies, the individual Non-U.S. Shareholder generally will be subject to a flat 30% U.S. federal income tax onany capital gain recognized upon the sale or other disposition of Shares, which may be offset by certain U.S.source losses. If clause (2) applies, the Non-U.S. Shareholder will generally be required to pay U.S. federalincome tax on the income or gain derived from the ownership of the Shares in the same manner as a U.S.Shareholder, as described above. In addition, corporate Non-U.S. Shareholders may be subject to a 30% branchprofits tax on their “effectively connected” earnings and profits attributable to such income or gain (subject toadjustments). If a Non-U.S. Shareholder is eligible for the benefits of a tax treaty between the United States andits country of residence, the tax treatment of any such income or gain may be modified in the manner specifiedby the treaty.
ESTATE AND GIFT TAX CONSIDERATIONS FOR NON-U.S. SHAREHOLDERS
Under the U.S. federal tax law, individuals who are neither citizens nor residents (as determined for federal estateand gift tax purposes) of the United States are subject to estate tax on all property that has a U.S. “situs.” Sharesmay well be considered to have a U.S. situs for these purposes. If they are, then Shares would be includible in theU.S. gross estate of a non-resident alien Shareholder. Currently, U.S. estate tax is imposed at rates of up to 40%of the fair market value of the taxable estate. The U.S. estate tax rate is subject to change in future years. Inaddition, the U.S. federal “generation-skipping transfer tax” may apply in certain circumstances. The estate of anon-resident alien Shareholder who was resident in a country that has an estate tax treaty with the United Statesmay be entitled to benefit from such treaty.
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For non-citizens and non-residents of the United States, the U.S. federal gift tax generally applies only to gifts oftangible personal property or real property having a U.S. situs. Tangible personal property (including gold) has aU.S. situs if it is physically located in the United States. Although the matter is not settled, it appears thatownership of Shares should not be considered ownership of the underlying gold for this purpose, even to theextent that gold was held in custody in the United States. Instead, Shares should be considered intangibleproperty, and therefore they should not be subject to U.S. gift tax if transferred during the holder’s lifetime. SuchShareholders are urged to consult their tax advisors regarding the possible application of U.S. estate, gift andgeneration-skipping transfer taxes in their particular circumstances.
TAXATION IN JURISDICTIONS OTHER THAN THE UNITED STATES
Prospective purchasers of Shares that are based in or acting out of a jurisdiction other than the United States areadvised to consult their tax advisors as to the tax consequences, under the laws of such jurisdiction (or any otherjurisdiction not being the United States to which they are subject), of their purchase, holding, sale andredemption of or any other dealing in Shares and, in particular, as to whether any value added tax, otherconsumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or otherdealing.
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ERISA and Related Considerations
IN GENERAL
The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and Code section 4975 imposecertain requirements on employee benefit plans and certain other plans and arrangements, including individualretirement accounts and annuities, Keogh plans, and entities that are subject to ERISA or the Code section 4975in which such plans or arrangements are invested, including certain collective investment funds or insurancecompany general or separate accounts (collectively, the “Plans”), and on persons who are fiduciaries with respectto the investment of assets treated as “plan assets” of a Plan. Government plans and some church plans are notsubject to the fiduciary responsibility provisions of ERISA or the provisions of Code section 4975, but may besubject to substantially similar rules under state or other federal law.
In contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for makingsuch investment should carefully consider, taking into account the facts and circumstances of the Plan, the “RiskFactors” discussed above and whether such investment is consistent with its fiduciary responsibilities, including,but not limited to (1) whether the fiduciary has the authority to make the investment under the appropriategoverning plan instrument; (2) whether the investment would constitute a direct or indirect non-exempt“prohibited transaction” with a “party in interest” or “disqualified person,” as described in ERISA section 406 ofERISA or Code section 4975, as applicable; (3) the Plan’s funding objectives; and (4) whether under the generalfiduciary standards of investment prudence and diversification such investment is appropriate for the Plan, takinginto account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and thePlan’s need for sufficient liquidity to pay benefits when due.
The Shares constitute “publicly-offered securities” as defined in Department of Labor Regulations§ 2510.3-101(b)(2). Accordingly, Shares purchased by a Plan, and not an interest in the underlying Gold Bullionheld in the Fund represented by the Shares, should be treated as assets of the Plan, for purposes of applying the“fiduciary responsibility” and “prohibited transaction” rules of ERISA and the Code.
“PLAN ASSETS”
ERISA and a regulation issued thereunder by the U.S. Department of Labor (collectively, the “Plan Asset Rules”)contain rules for determining when an investment by a Plan in an equity interest of an entity will result in theunderlying assets of such entity being considered to constitute assets of the Plan for purposes of the fiduciaryresponsibility and prohibited transaction provisions of ERISA and/or Section 4975 of the Code (i.e., “planassets”). These Plan Asset Rules provide that assets of an entity will not be considered assets of a Plan whichpurchases an equity interest in the entity if one or more exceptions apply, including an exception applicable if theequity interest purchased is a “publicly-offered security” (the “Publicly-Offered Security Exception”).
The Publicly-Offered Security Exception applies if the equity interest is a security that is (1) “freelytransferable,” (2) part of a class of securities that is “widely held” and (3) either (a) part of a class of securitiesregistered under Section 12(b) or 12(g) of the 1934 Act, or (b) sold to the Plan as part of a public offeringpursuant to an effective registration statement under the 1933 Act and the class of which such security is a part isregistered under the 1934 Act within 120 days (or such later time as may be allowed by the SEC) after the end ofthe fiscal year of the issuer in which the offering of such security occurred. The Trust expects that the Publicly-Offered Security Exception should apply with respect to the Shares of the Fund, so that the assets of the Fund,including the Gold Bullion, should not be considered the plan assets of a Plan investing in Shares.
PROHIBITED TRANSACTIONS
Without regard to whether the assets of the Fund are considered to be the “plan assets” of investing Plans,the acquisition of Shares by a Plan from an Authorized Participant, or the sale or exchange of Shares between a
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Plan and another investor, if such Authorized Participant or other investor or their affiliate is a “party in interest”as defined in ERISA section 3(14) or a “disqualified person” as defined in Code section 4975 with respect to thePlan could cause a prohibited transaction under ERISA section 406 and Code section 4975. There are certainexemptions (“prohibited transaction class exemptions” or “PTCEs” from the prohibited transaction rules thatcould be applicable, depending on the type of Plan involved and the circumstances of the plan fiduciary’sdecision to acquire Shares. Included among these exemptions are: PTCE 84-14 (relating to transactions effectedby a “qualified professional asset manager”); PTCE 90-1 (relating to transactions involving insurance companypooled separate accounts); PTCE 91-38 (relating to transactions involving bank collective investment funds);PTCE 95-60 (relating to transactions involving insurance company general accounts); and PTCE 96-23 (relatingto transactions effected by an “in-house asset manager”). There is also a statutory exemption that may beavailable under ERISA section 408(b)(17) and Code section 4975(d)(20) to a party in interest that is a serviceprovider to a Plan investing in the Shares for adequate consideration, provided such service provider is not (i) thefiduciary with respect to the Plan’s assets used to acquire the Shares or an affiliate of such fiduciary or (ii) anaffiliate of the employer sponsoring the Plan. There can be no assurance that any of these exemptions, or anyother exemption, will be available with respect to any particular transaction involving the Shares.
In addition, Shares generally should not be purchased with the assets of a Plan if the Sponsor, the CPO, theAdministrator, the Transfer Agent, the Custodian, the Gold Delivery Provider, the Trustee or any of theirrespective affiliates, any of their respective employees or any employees of their respective affiliates: (1) hasinvestment discretion with respect to the investment of such plan assets; (2) has authority or responsibility to giveor regularly gives investment advice with respect to such plan assets, for a fee, and pursuant to an agreement orunderstanding that such advice will serve as a primary basis for investment decisions with respect to such planassets and that such advice will be based on the particular investment needs of the Plan; or (3) is an employermaintaining or contributing to such Plan. A party that is described in clause (1) or (2) of the preceding sentencewould be a fiduciary under ERISA and the Code with respect to the Plan, and unless an exemption applies, anysuch purchase might result in a “prohibited transaction” under ERISA and the Code.
Except as otherwise set forth, the foregoing statements regarding the consequences under ERISA and the Code ofan investment in Shares of the Fund are based on the provisions of the Code and ERISA as currently in effect,and the existing administrative and judicial interpretations thereunder. No assurance can be given thatadministrative, judicial or legislative changes will not occur that will not make the foregoing statements incorrector incomplete.
THE PERSON WITH INVESTMENT DISCRETION ACTING ON BEHALF OF A PLAN SHOULDCONSULT WITH HIS OR HER ATTORNEY AND FINANCIAL ADVISERS AS TO THE PROPRIETY OFAN INVESTMENT IN SHARES IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLANAND CURRENT TAX LAW. SEE ALSO “UNITED STATES FEDERAL TAX CONSEQUENCES —INVESTMENT BY CERTAIN RETIREMENT PLANS.”
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The Declaration of Trust
The Trust operates under the terms of the Declaration of Trust, dated as of August 27, 2014, as amended andrestated on June 30, 2016 and further amended and restated on September 13, 2016 and January 6, 2017, betweenthe Sponsor, and the Trustee. A copy of the Declaration of Trust is available for inspection at the Trustee’soffice. The following is a description of the material terms of the Declaration of Trust.
THE SPONSOR
This section summarizes some of the important provisions of the Declaration of Trust that apply to the Sponsor.For a general description of the Sponsor’s role concerning the Trust, see the section “Prospectus Summary —The Sponsor.”
Liability of the Sponsor and indemnification
The Sponsor will not be liable to the Trust, the Trustee or any Shareholder for any action taken or for refrainingfrom taking any action in good faith, or for errors in judgment or for depreciation or loss incurred by reason ofthe sale of any Gold Bullion or other assets of the Fund or the Trust. However, the preceding liability exclusionwill not protect the Sponsor against any liability resulting from its own gross negligence, bad faith, or willfulmisconduct.
The Sponsor and each of its shareholders, members, directors, officers, employees, affiliates and subsidiaries willbe indemnified by the Trust and held harmless against any losses, liabilities or expenses incurred in theperformance of its duties under the Declaration of Trust without gross negligence, bad faith, or willfulmisconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation,opinion, endorsement, assignment, draft or any other document of any kind prima facie properly executed andsubmitted to it by the Trustee, the Trustee’s counsel or by any other person for any matters arising under theDeclaration of Trust. The Sponsor shall in no event be deemed to have assumed or incurred any liability, duty, orobligation to any Shareholder or to the Trustee other than as expressly provided for in the Declaration of Trust.Such indemnity includes payment from the Trust of the costs and expenses incurred in defending against anyindemnified claim or liability under the Declaration of Trust.
THE TRUSTEE
This section summarizes some of the important provisions of the Declaration of Trust that apply to the Trustee.For a general description of the Trustee’s role concerning the Trust, see the section “Prospectus Summary — TheTrustee.”
Liability of the Trustee and indemnification
The Trustee will not be liable or accountable to the Trust or any other person or under any agreement to whichthe Trust or any Fund is a party, except for the Trustee’s breach of its obligations pursuant to the Declaration ofTrust or its own willful misconduct, bad faith or gross negligence. The Trustee and each of its officers, affiliates,directors, employees, and agents will be indemnified by the Trust from and against any losses, claims, taxes,damages, reasonable expenses, and liabilities incurred with respect to the creation, operation or termination of theTrust, the execution, delivery or performance of the Declaration of Trust or the transactions contemplatedthereby; provided that the indemnified party acted without willful misconduct, bad faith or gross negligence.
Duties
The Trustee does not have any of the duties or liabilities of the Sponsor. The duties of the Trustee are limited to(i) accepting legal process served on the Trust in the State of Delaware, (ii) the execution of any certificates
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required to be filed with the Secretary of State of the State of Delaware which the Delaware Trustee is required toexecute under Section 3811 of the Delaware Statutory Trust Act, and (iii) any other duties specifically allocatedto the Trustee in the Declaration of Trust or agreed in writing with the Sponsor from time to time.
Resignation, discharge or removal of Trustee; successor trustees
The Trustee may resign at any time by giving at least 60 days advance written notice to the Trust, provided thatsuch resignation will not become effective until such time as a successor Trustee has accepted appointment asTrustee of the Trust. The Sponsor may remove the Trustee at any time by giving at least 60 days advance writtennotice to the Trustee, provided that such removal will not become effective until such time as a successor Trusteehas accepted appointment as Trustee of the Trust. Upon effective resignation or removal, the Trustee will bedischarged of its duties and obligations.
STATEMENTS, FILINGS AND REPORTS
Proper books of account for the Fund shall be kept and shall be audited annually by an independent certifiedpublic accounting firm selected by the Sponsor in its sole discretion, and there shall be entered therein alltransactions, matters and things relating to each Fund’s business as are required by the Securities Act, asamended; the CEA and regulations promulgated thereunder; and all other applicable rules and regulations, and asare usually entered into books of account kept by persons engaged in a business of like character. The books ofaccount shall be kept at the principal office of the Trust.
The Trust will furnish to DTC Participants for distribution to shareholders annual reports (as of the end of eachfiscal year) for the Fund as are required to be provided to shareholders by the CFTC and the NFA. These annualreports will contain financial statements prepared by the Sponsor and audited by an independent registered publicaccounting firm designated by the Sponsor. The Trust will also post monthly statements of account to the Fund’swebsite at http://www.spdrgoldshares.com. These monthly statements of account will contain certain unauditedfinancial information regarding the Fund, including the Fund’s NAV. The Sponsor will furnish to theshareholders other reports or information which the Sponsor, in its discretion, determines to be necessary orappropriate. In addition, under SEC rules the Trust will be required to file quarterly and annual reports for theFund with the SEC, which need not be sent to shareholders but will be publicly available through the SEC. TheTrust will post the same information that would otherwise be provided in the Trust’s CFTC, NFA and SECreports on the Fund’s website at http://www.spdrgoldshares.com.
FISCAL YEAR
The fiscal year of the Fund is the period ending September 30 of each year. The Sponsor has the continuing rightto select an alternate fiscal year.
TERMINATION OF THE TRUST OR THE FUND
The Sponsor may terminate the Trust or the Fund in its sole discretion. The Sponsor will give written notice ofthe termination of the Trust or the Fund, specifying the date of termination, to Shareholders of the Trust or Fund,as applicable, at least 30 days prior to the termination of the Trust or the Fund. The Sponsor will, within areasonable time after such termination, sell all of the Gold Bullion not already distributed to AuthorizedParticipants redeeming Creation Units, if any, in such a manner so as to effectuate orderly sales and a minimalmarket impact. The Sponsor shall not be liable for or responsible in any way for depreciation or loss incurred byreason of any sale or sales made in accordance with the provisions of the Declaration of Trust. The Sponsor maysuspend its sales of the Gold Bullion upon the occurrence of unusual or unforeseen circumstances, including, butnot limited to, a suspension in trading of gold.
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AMENDMENTS TO DECLARATION OF TRUST
The Declaration of Trust can be amended by the Sponsor in its sole discretion and without the Shareholders’consent by making an amendment, a Declaration of Trust supplemental thereto, or an amended and restateddeclaration of trust. Any such restatement, amendment and/or supplement hereto shall be effective on such dateas designated by Sponsor in its sole discretion.
GOVERNING LAW
The Declaration of Trust and the rights of the Sponsor, the Trustee, DTC (as registered owner of the Trust’sglobal certificates for Shares) and the Shareholders under the Declaration of Trust are governed by the laws ofthe State of Delaware.
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Plan of Distribution
The Fund issues Shares in Creation Units to Authorized Participants from time to time in exchange for depositsof the amount of Gold Bullion represented by the Creation Units being created. Because new Shares can becreated and issued on an ongoing basis, at any point during the life of the Fund, a “distribution,” as such term isused in the Securities Act, will be occurring.
Authorized Participants, other broker-dealers and other persons are cautioned that some of their activities willresult in their being deemed participants in a distribution in a manner which would render them statutoryunderwriters and subject them to the prospectus-delivery and liability provisions of the Securities Act. Forexample, an Authorized Participant, other broker-dealer firm or its client will be deemed a statutory underwriterif it purchases a Creation Unit from the Fund, breaks the Creation Unit down into the constituent Shares and sellsthe Shares to its customers, or if it chooses to couple the creation of a supply of new Shares with an active sellingeffort involving solicitation of secondary market demand for the Shares. A determination of whether one is anunderwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealeror its client in the particular case, and the examples mentioned above should not be considered a completedescription of all the activities that would lead to categorization as an underwriter.
Currently, the Authorized Participants are Goldman, Sachs & Co., J.P. Morgan Securities, Inc., Merrill LynchProfessional Clearing Corp., Morgan Stanley & Co. LLC, UBS Securities LLC, and Virtu Financial BD, LLC.
Investors who purchase Shares through a commission/fee-based brokerage account may pay commissions/feescharged by the brokerage account. Investors are encouraged to review the terms of their brokerage accounts fordetails on applicable charges.
Dealers who are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondarytrading transactions), and thus dealing with Shares that are part of an “unsold allotment” within the meaning ofsection 4(a)(3)(C) of the Securities Act, would be unable to take advantage of the prospectus-delivery exemptionprovided by section 4(a)(3) of the Securities Act.
The Shares are qualified in states selected by the Sponsor and through broker-dealers who are members ofFINRA. Investors intending to create or redeem Creation Units through Authorized Participants in transactionsnot involving a broker-dealer registered in an investor’s state of domicile or residence should consult their legaladvisors regarding applicable broker-dealer or securities regulatory requirements under the state securities lawsprior to such creation or redemption.
The Sponsor has agreed to indemnify certain parties against certain liabilities, including liabilities under theSecurities Act, and to contribute to payments that such parties may be required to make in respect of thoseliabilities. The Administrator has agreed to reimburse such parties, solely from and to the extent of the Fund’sassets, for indemnification and contribution amounts due from the Sponsor in respect of such liabilities to theextent the Sponsor has not paid such amounts when due. In addition, Sponsor has agreed to indemnify certainparties against certain liabilities.
The Shares trade on NYSE Arca under the symbol “GLDW.”
The Marketing Agent is assisting the Sponsor in, among other things: (1) developing a marketing plan for theFund on an ongoing basis; (2) preparing marketing materials regarding the Shares, including the content on theFund’s website; (3) executing the marketing plan for the Fund; (4) conducting public relations activities relatedto the marketing of Shares; and (5) incorporating gold into its strategic and tactical exchange-traded fundresearch.
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Legal Proceedings
None.
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Legal Matters
The validity of the Shares has been passed upon for the Sponsor by Morgan, Lewis & Bockius LLP, which, asU.S. tax counsel to the Fund, has also rendered an opinion regarding the material federal income taxconsequences relating to the Shares.
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Experts
The financial statements included in this Prospectus and included elsewhere in the registration statement havebeen audited by KPMG LLP, an independent registered public accounting firm, as stated in their report appearingherein and elsewhere in the registration statement, and is included in reliance upon the report of such firm givenupon their authority as experts in accounting and auditing.
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Where You Can Find More Information
The Sponsor has filed on behalf of the Fund a registration statement on Form S-1 with the SEC under theSecurities Act. This Prospectus does not contain all of the information set forth in the registration statement(including the exhibits to the registration statement), parts of which have been omitted in accordance with therules and regulations of the SEC. For further information about the Fund or the Shares, please refer to theregistration statement, which you may inspect, without charge, at the public reference facilities of the SEC at thebelow address or online at www.sec.gov, or obtain at prescribed rates from the public reference facilities of theSEC at the below address. Information about the Fund and the Shares can also be obtained from the Fund’swebsite. The Internet address of the Fund’s website is http://www.spdrgoldshares.com. This Internet address isonly provided here as a convenience to you to allow you to access the Fund’s website, and the informationcontained on or connected to the Fund’s website is not part of this Prospectus or the registration statement ofwhich this Prospectus is a part.
The Fund is subject to the informational requirements of the Exchange Act, and the Sponsor, on behalf of theFund, will file quarterly and annual reports and other information with the SEC. The Sponsor maintains anInternet website at www.spdrgoldshares.com, through which the Trust’s annual reports on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnishedpursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge after they have beenfiled or furnished with the SEC. This Internet address is only provided here as a convenience to you, and theinformation contained on or connected to the Sponsor’s website is not considered part of this filing. Additionalinformation regarding the Trust may also be found on the SEC’s EDGAR database at www.sec.gov.
Incorporation of Certain Information by Reference
The SEC allows us to “incorporate by reference” the information we have filed with them, which means that wecan disclose important information to you by referring you to those documents. All documents subsequently filedby us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offeringshall be deemed to be incorporated by reference into the Prospectus. The information we incorporate by referenceis an important part of this Prospectus, and information that we file later with the SEC will automatically updateand supersede this information. The documents we are incorporating by reference are:
• Our Annual Report on Form 10-K for the fiscal year ended September 30, 2018, along with thefinancial statements and related notes thereto, filed with the SEC on November 27, 2018; and
• The description of our common stock contained in our registration on Form 8-A12B (FileNo. 001-37996) filed with the SEC on January 24, 2017, including any amendment or report filed forthe purpose of updating such description.
Upon written or oral request, the Sponsor will provide without charge to each person to whom a copy of theProspectus is delivered a copy of the documents incorporated by reference herein (other than exhibits to suchdocuments, unless such exhibits are specifically incorporated by reference herein). You may request a copy ofthese filings, at no cost, by writing or telephoning the Sponsor at the following address: c/o WGC USA AssetManagement Company, LLC, 685 Third Avenue, 27th Floor, New York, New York 10017, telephone:(212) 317-3800. The Sponsor maintains a public website on behalf of the Fund, containing information about theFund and the Shares. The Internet address of the Fund’s website is http://www.spdrgoldshares.com. You mayaccess the Fund’s annual reports on Form 10-K, quarterly reports on Form 10-Q, definitive proxy statements onSchedule 14A, current reports on Form 8-K and periodic amendments to those reports filed or furnished pursuantto Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at the Fund’s website as soon asreasonably practicable after such material is electronically filed with, or furnished to, the SEC. The informationcontained in, or that can be accessed through, the Fund’s website is not incorporated by reference in, and is notpart of, this Prospectus. We have not authorized anyone to provide you with any information that differs fromthat contained in this Prospectus. Accordingly, you should not rely on any information that is not contained in
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this Prospectus. You should not assume that the information in this Prospectus is accurate as of any date otherthan the date of the front cover of this Prospectus.
COMPARING THE PERFORMANCE OF THE INDEX AND THE GOLD PRICE
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OFWHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNTWILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT,THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCERESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULARTRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY AREGENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICALTRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORDCAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOREXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADINGPROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSOADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORSRELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFICTRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OFHYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECTACTUAL TRADING RESULTS.
THE SPONSOR HAS HAD LITTLE OR NO EXPERIENCE IN TRADING ACTUAL ACCOUNTS FORITSELF OR FOR CUSTOMERS. BECAUSE THERE ARE NO ACTUAL TRADING RESULTS TOCOMPARE TO THE HYPOTHETICAL PERFORMANCE RESULTS, CUSTOMERS SHOULD BEPARTICULARLY WARY OF PLACING UNDUE RELIANCE ON THESE HYPOTHETICALPERFORMANCE RESULTS.
TABLE 1 AND CHARTS 1-4
Table 1 and Charts 1-4 below show:
(i) The performance of the Gold Price and the Index over various periods dating back to 2007 (see Table 1and Charts 1-2);
(ii) The correlation of the Gold Price and the Index against the USD during this time (see Table 1);
(iii) The correlation between the Gold Price, the Index and various asset classes during this time (seeChart 3); and
(iv) The volatility of the Gold Price and the Index during this time (see Table 1 and Chart 4).
The results shown below with respect to the Index are hypothetical based on back-testing of the Index and are notnecessarily indicative of future results. Such results also do not reflect fees and expenses necessary to operate theFund. Though the length of the survey period is limited and is based on pre-inception Index performance, whichlimits the conclusions that can be drawn from the results, Table 1 and Chart 4 each show that the Index has hadgenerally lower volatility than the Gold Price across various periods dating back to January 3, 2007. As shown inTable 1, the correlation between the Index and the USD during this period is smaller in magnitude (and oftentimes very close to zero) than the consistently negative correlation between the Gold Price and the USD. Duringsuch time period, however, many factors have affected the fluctuations of gold, the USD and the ReferenceCurrencies comprising the FX Basket which may affect the usefulness of the data regarding the correlationbetween the Index, gold, the USD and the Reference Currencies comprising the FX Basket.
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In terms of returns, during the periods measured, the Index has historically outperformed the Gold Price onperiods when the USD has strengthened against the Reference Currencies comprising the FX Basket. Conversely,it has historically underperformed the Gold Price over periods when the USD has weakened against theReference Currencies comprising the FX Basket. Of course, as with all indexes and investment strategies, thepast hypothetical performance of the Index is not indicative of future performance and there can be no guaranteethe Index will perform in a similar manner in the future. In addition, the data regarding the Index is preliminaryand subject to change.
For purposes of Table 1 and Charts 1-4, the terms “Gold” or “Gold Price” correspond to the LBMA Gold PricePM (or, for periods prior to March 20, 2015, the London Gold PM Fix). Table 1 and Charts 1-4 would haveshown substantially similar results if they were based on the LBMA Gold Price AM (or, for periods prior toMarch 20, 2015, the London Gold PM Fix).
Table 1: Performance of gold (US$/oz) versus the Index over various periods of time*
* As of September 30, 2018. Last available values used for non-trading days when applicable.
Gold corresponds to the London Gold PM Fix and the LBMA Gold Price PM in USD per ounce. TheLBMA Gold Price replaced the previously established London Gold Fix on March 20, 2015. The Indexcorresponds to the Solactive GLD® Long USD Gold Index. The Index has been calculated on a “live” basissince July 20, 2016. Backtested data published by Solactive AG is available going back to January 3, 2007under the Bloomberg ticker SOLGLDWE. Performance metrics and other statistics for the Index prior toJuly 20, 2016 should be considered as indicative.
† Volatility computed as the standard deviation of daily returns and annualized by multiplying by thesquare-root of 260.
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†† Correlations computed using daily returns. The ‘US Dollar Index’ is a currency benchmark that measuresthe performance of the US dollar against a basket of currencies comprised of: 57.6% EUR, 13.6% JPY,11.9% GBP, 9.1% CAD, 4.2% SEK and 3.6% CHF. The currencies and w eights w ere determined by theUS Federal Reserve as a measure of the foreign exchange value of the dollar and are static. Thesecorrespond to the same currencies and w eights included in the Solactive GLD® Long USD Gold Index.
Source: Bloomberg, ICE Benchmark Administration, Solactive AG, World Gold Council
CHART 1:
Performance of gold (USD/oz) and the Index since inception (1/1/2007 = 100)*
*As of September 30, 2018. Gold based on the LBMA Gold Price PM, the Index on the Solactive GLD® LongUSD Gold Index.Source: Bloomberg, ICE Benchmark Administration, Solactive, World Gold Council
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CHART 3:
Correlation between the gold (US$/oz), the Index and various asset classes
Gold (US$/oz)
Gold (US$/oz) IndexCorrelation
Global bonds
US Treasuries
US bonds
US stocks
-0.2 0.0 0.2 0.4 0.6 0.8 1.0
Global stocks
Commodities
*Correlation computed using weekly returns between January 1, 2007 and September 30, 2018. Gold based onthe LBMA Gold Price PM, the Index on the Solactive GLD® Long USD Gold Index. US stocks based on theS&P 500 Index, Global stocks on the MSCI All Country World Index, US bonds on the Barclays US AggregateIndex, US Treasuries on the Barclays US Treasury Index, Global bonds on the Barclays Global Bond Aggregate,and commodities based on the S&P Goldman Sachs Commodity Index.
*As of September 30, 2018. Volatility computed using daily returns. Gold based on the LBMA Gold Price PM,the Index on the Solactive GLD® Long USD Gold Index.Source: Bloomberg, ICE Benchmark Administration, Solactive, World Gold Council
TABLE 2
Table 2 below shows the percentage change (return) for gold (US$/oz) and the Index as a function of thedirection of the USD. The results shown in Table 2 with respect to the Index are hypothetical based on back-testing of the Index and are not necessarily indicative of future results. Such results also did not reflect fees andexpenses necessary to operate the Fund.
In general, the Index has historically outperformed the Gold Price on days when the USD appreciates(strengthens) against the Reference Currencies comprising the FX Basket. Conversely, the Index has historicallyunderperformed the Gold Price in periods when the USD depreciates (weakens) against the Reference Currenciescomprising the FX Basket. The net effect (total return) over a longer period of time will depend on whether thereare more days in which the USD strengthens or more days in which it weakens, and the magnitude of suchchanges on each day. Table 2 also shows that the Index has historically had a lesser sensitivity to changes in thevalue of the USD than the Gold Price US$/oz has had.
For purposes of Table 2, the terms “Gold” or “Gold Price” correspond to the LBMA Gold Price PM (or, forperiods prior to March 20, 2015, the London Gold PM Fix). Table 2 would have shown substantially similarresults if it was based on the LBMA Gold Price AM (or, for periods prior to March 20, 2015, the London GoldAM Fix).
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Table 2: Index return in excess of gold compared on months when the US Dollar Index goes up or down*
Average monthly return of theIndex in excess of gold†
* As of September 30, 2018. Last available values used for non-trading days when applicable.Gold corresponds to the London Gold PM Fix and the LBMA Gold Price PM in USD per ounce. TheLBMA Gold Price replaced the previously established London Gold Fix on March 20, 2015. The Indexcorresponds to the Solactive GLD® Long USD Gold Index. The Index has been calculated on a “live” basissince July 20, 2016. Backtested data published by Solactive AG is available going back to January 3, 2007under the Bloomberg ticker SOLGLDWE. Performance metrics and other statistics for the Index prior toJuly 20, 2016 should be considered as indicative. The US Dollar Index is a currency benchmark thatmeasures the performance of the US dollar against a basket of currencies comprised of: 57.6% EUR, 13.6%JPY, 11.9% GBP, 9.1% CAD, 4.2% SEK and 3.6% CHF. The currencies and weights were determined bythe US Federal Reserve as a measure of the foreign exchange value of the dollar and are static. Thesecorrespond to the same currencies and weights included in the Solactive GLD® Long USD Gold Index.
† Monthly average of Index returns minus gold returns for each corresponding period.†† Average excess return computed only during months when the US Dollar Index was up against the basket of
referrence currencies over each corresponding period.‡ Average excess return computed only during months when the US Dollar Index was down against the basket
of referrence currencies over each corresponding period.
Source: Bloomberg, ICE Benchmark Administration, Solactive, World Gold Council
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OFWHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNTWILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT,THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCERESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULARTRADING PROGRAM.
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ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY AREGENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICALTRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORDCAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOREXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADINGPROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSOADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORSRELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFICTRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OFHYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECTACTUAL TRADING RESULTS.
THE SPONSOR HAS HAD LITTLE OR NO EXPERIENCE IN TRADING ACTUAL ACCOUNTS FORITSELF OR FOR CUSTOMERS. BECAUSE THERE ARE NO ACTUAL TRADING RESULTS TOCOMPARE TO THE HYPOTHETICAL PERFORMANCE RESULTS, CUSTOMERS SHOULD BEPARTICULARLY WARY OF PLACING UNDUE RELIANCE ON THESE HYPOTHETICALPERFORMANCE RESULTS.
TABLE 3
Table 3 below shows the performance of gold, the performance of the Index, and the approximate FXcontribution. The approximate FX contribution is the differential between the Index return and the Gold Price inUS$/oz. The results shown in Table 3 with respect to the Index are hypothetical based on back-testing of theIndex and are not necessarily indicative of future results. Such results also did not reflect fees and expensesnecessary to operate the Fund.
Table 3: Performance of gold (USD/oz), the Index, and the approximate US dollar basket (FX) contribution*
* As of September 30, 2018. Last available values used for non-trading days when applicable.
Gold (PM) corresponds to the LBMA Gold Price PM and the London Gold PM Fix in USD per ounce. Gold(AM) corresponds to the LBMA Gold Price AM and the London Gold AM Fix in USD per ounce. TheLBMA Gold Price replaced the previously established London Gold Fix on March 20, 2015. The Indexcorresponds to the Solactive GLD® Long USD Gold Index. The Index has been calculated on a “live” basissince July 20, 2016. Backtested data published by Solactive AG is available going back to January 3, 2007under the Bloomberg ticker SOLGLDWE. Performance metrics and other statistics for the Index prior toJuly 20, 2016 should be considered as indicative.
† The approximate FX contribution is the differential between the Solactive GLD® Long USD Gold Indexreturn and the LBMA Gold Price AM (USD/oz).
The approximate FX contribution is computed as follows: (1+R(GW))=(1+R(G))×(1+R(iFX)), orequivalently (1+R(iFX))=(1+R(GW))/(1+R(G)), where for each corresponding period R(GW) is the returnof the Solactive GLD® Long USD Gold Index, R(G) is the return of the LBMA Gold Price AM (US$/oz),and R(iFX) is the corresponding return of the approximate FX contribution.
Source: Bloomberg, ICE Benchmark Administration, Solactive AG, World Gold Council
TABLE 4
Table 4 below shows the approximate FX contribution per day. The approximate FX contribution is thedifferential between the Index return and the Gold Price in US$/oz. The results shown in Table 4 with respect tothe Index are hypothetical based on back-testing of the Index and are not necessarily indicative of future results.Such results also did not reflect fees and expenses necessary to operate the Fund.
* As of September 30, 2018. Last available values used for non-trading days when applicable.
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The Solactive GLD® Long USD Gold Index has been calculated on a “live” basis since July 20, 2016.Backtested data published by Solactive AG is available going back to January 3, 2007 under the Bloombergticker SOLGLDWE. Performance metrics and other statistics for the Index prior to July 20, 2016 should beconsidered as indicative.
† The approximate FX contribution is the differential between the Solactive GLD® Long USD Gold Indexreturn and the LBMA Gold Price AM (USD/oz).
It is computed as follows: (1+R(GW))=(1+R(G))×(1+R(iFX)) or equivalently (1+R(iFX))=(1+R(GW))/(1+R(G)), where for each corresponding period R(GW) is the return of the Solactive GLD Long USD GoldIndex, R(G) is the return of the LBMA Gold Price AM (US$/oz), and R(iFX) is the corresponding return ofthe approximate FX contribution.
†† Average of the absolute daily return of the approximate FX over the period is computed as: (1/n)∑|R(iFX)|;where R(iFX) is the approximate FX return on a given day, ‘| |’ represents the absolute value, ‘∑’ is thesummation of all relevant values in a period, and ‘n’ is the number of business days in each respectiveperiod.
‡ Daily volatility of the approximate FX, computed as the standard deviation of the approximate FX returnsover each period.
Source: Bloomberg, ICE Benchmark Administration, Solactive AG, World Gold Council
The past performance depicted in Charts 1, 2, 3 and 4 above is not indicative of future performance and is noguarantee of future results.
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Chart 5: Fund Performance Scenarios
The chart below illustrates how the Fund is intended to perform if (1) the price of gold increases and the value ofthe USD (“USD”) against the Reference Currencies comprising the FX Basket decreases as depicted below in theupper left quadrant “Fund NAV Increases or Decreases”; (2) the price of gold increases and the value of the USDagainst the Reference Currencies comprising the FX Basket increases as depicted below in the quadrant “FundNAV Increases;” (3) the price of gold decreases and the value of the USD against the Reference Currenciescomprising the FX Basket decreases as depicted below in the quadrant “Fund NAV Decreases;” and (4) the priceof gold decreases and the value of the USD against the Reference Currencies comprising the FX Basket increasesas depicted below in the lower right quadrant “Fund NAV Increases or Decreases.” The chart does not take intoaccount any fees and expenses of the Fund. Of course, there can be no guarantee of future results and pastperformance is not indicative of future performance.
Fund NAVIncreasesor Decreases(1)
Fund NAV Increasesor Decreases(2)
Fund NAVDecreases
Fund NAVIncreases
-20 -15 -10 -5 5 10 15 20
0
20
15
10
5
-5
-10
-15
-20
% Change in Valueof USD vs.ReferenceCurrencies
% C
hang
e in
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(1) The NAV of the Fund will increase or decrease depending upon whether the increase in the price of gold hasa greater or lesser impact on the NAV of the Fund than the decrease in the value of the USD against theReference Currencies comprising the FX Basket. If the increase in the price of gold has a greater impact onthe NAV of the Fund than the decrease in the USD against the Reference Currencies comprising the FX
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Basket or if the value of the USD against the Reference Currencies comprising the FX Basket remains flat,the NAV of the Fund will increase. Conversely, if the decrease in the value of the USD against theReference Currencies comprising the FX Basket has a greater impact on the NAV of the Fund than theincrease in the price of gold or if the price of gold remains flat, the NAV of the Fund will decrease.
(2) The NAV of the Fund will increase or decrease depending upon whether the increase in the value of theUSD against the Reference Currencies comprising the FX Basket has a greater or lesser impact on the NAVof the Fund than the decrease in the value of the price of gold. If the increase in the value of the USDagainst the Reference Currencies comprising the FX Basket has a greater impact on the NAV of the Fundthan the decrease in the price of gold or if the price of gold remains flat, the NAV of the Fund will increase.Conversely, if the decrease in the price of gold has a greater impact on the NAV of the Fund than theincrease in the value of the USD against the Reference Currencies comprising the FX Basket or if the valueof the USD against the Reference Currencies comprising the FX Basket remains flat, the NAV of the Fundwill decrease.
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APPENDIX A
GLOSSARY OF DEFINED TERMS
In this Prospectus, each of the following quoted terms has the meaning set forth after such term:
“Administrator” — BNYM, a banking corporation organized under the laws of the State of New York.
“Allocated Bullion Account Agreement” — The agreement between the Trust and the Custodian whichestablishes the Fund Allocated Account. The Allocated Bullion Account Agreement and the Unallocated BullionAccount Agreement are sometimes referred to together as the “Custody Agreements.”
“Authorized Participant” — A person who (1) is a registered broker-dealer or other securities market participantsuch as a bank or other financial institution which is not required to register as a broker-dealer to engage insecurities transactions, (2) is a participant in DTC, (3) has entered into a Participant Agreement with theAdministrator and (4) has established an Authorized Participant Unallocated Account with the Custodian. OnlyAuthorized Participants may place orders to create or redeem one or more Creation Units.
“Authorized Participant Unallocated Account” — An unallocated Gold Bullion account established with theCustodian by an Authorized Participant. Each Authorized Participant’s Authorized Participant UnallocatedAccount will be used to facilitate the transfer of Gold Bullion deposits and Gold Bullion redemption distributionsbetween the Authorized Participant and the Fund in connection with the creation and redemption of CreationUnits.
“BNYM” — BNYM is the Administrator and Transfer Agent of the Trust. BNYM also serves as the custodian ofthe Trust’s cash, if any.
“Book-Entry System” — The Federal Reserve Treasury Book-Entry System for United States and federal agencysecurities.
“Business Day” — Any day the Fund’s Listing Exchange is open for business.
“Calculation Agent” — Solactive AG.
“CEA” — The Commodity Exchange Act, as amended.
“CFTC” — The Commodity Futures Trading Commission, established under the CEA. The CFTC is anindependent agency of the United States Government with the mandate to regulate commodity interests,including commodity futures and option and swap markets in the United States.
“Code” — The United States Internal Revenue Code of 1986, as amended.
“Commodity Pool Operator” or “CPO” — WGC USA Asset Management Company, LLC is the CPO of theFund and is registered in such capacity with the CFTC and a member of the NFA.
“Creation Unit” — A block of 1,000 Shares or more or such other amount as established from time to time by theSponsor. Multiple blocks are called “Creation Units.”
“Creation Unit Gold Delivery Amount” — The total deposit of Gold Bullion required to create a Creation Unit.The Creation Unit Gold Delivery Amount is the number of ounces of Gold Bullion required to be delivered to theFund by an Authorized Participant in connection with a creation order for a single Creation Unit. The CreationUnit Gold Delivery Amount also refers to the amount of Gold Bullion to be paid out by the Fund in connectionwith the redemption of a Creation Unit.
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“Custodian” — HSBC Bank plc.
“Custody Agreements” — The Allocated Bullion Account Agreement together with the Unallocated BullionAccount Agreement.
“Custody Rules” — The rules, regulations, practices and customs of the LBMA, the Bank of England or anyapplicable regulatory body that apply to gold made available in physical form by the Custodian.
“Declaration of Trust” — The agreement and declaration of trust entered into by the Sponsor and the Trusteeunder which the Trust is formed and which sets forth the rights and duties of the Sponsor and the Trustee, as suchagreement and declaration of trust may be amended or restated from time to time.
“DTC” — The Depository Trust Company. DTC is a limited purpose trust company organized under New Yorklaw, a member of the U.S. Federal Reserve System and a clearing agency registered with the SEC pursuant to theprovisions of Section 17A of the Exchange Act. DTC will act as the securities depository for the Shares.
“DTC Participant” — A participant in DTC, such as a bank, broker, dealer or trust company.
“Exchange Act” — The Securities Exchange Act of 1934, as amended.
“Extraordinary Event” — The occurrence of a Market Disruption Event for ten consecutive Index Business Days.
“FCA” — The Financial Conduct Authority, an independent non-governmental body which exercises statutoryregulatory power under the FS Act and which regulates the major participating members of the LBMA in theUnited Kingdom.
“FS Act” — The Financial Services Act 2012.
“Fund Allocated Account” — The allocated Gold Bullion account of the Trust established with the Custodian onbehalf of the Fund by the Allocated Bullion Account Agreement. The Fund Allocated Account will be used tohold the Gold Bullion that is transferred from the Fund Unallocated Account to be held by the Fund in allocatedform (i.e., as individually identified bars of Gold Bullion).
“Fund Unallocated Account” — The unallocated Gold Bullion account of the Trust established with theCustodian on behalf of the Fund by the Unallocated Bullion Account Agreement. The Fund Unallocated Accountwill be used to facilitate the transfer of Gold Bullion in and out of the Fund. Specifically, it will be used totransfer Gold Bullion deposits and Gold Bullion redemption distributions between Authorized Participants andthe Fund in connection with the creation and redemption of Creation Units, in connection with the transfers ofGold Bullion to or from the Gold Delivery Provider, and in connection with sales of Gold Bullion for the Fund.
“FX Basket” — The basket of Reference Currencies with weighting determined by the Index.
“Gold Bullion” — (a) Gold Bullion meeting the requirements of London Good Delivery Standards or (b) creditto an Unallocated Account representing the right to receive Gold Bullion meeting the requirements of LondonGood Delivery Standards.
“Gold Delivery Agreement” — The agreement between the Trust, on behalf of the Fund, and the Gold DeliveryProvider dated December 28, 2016 to calculate the Gold Delivery Amount to be moved into or out of the Fund ona daily basis and to provide for delivery and settlement of such Gold Bullion.
“Gold Delivery Amount” — The amount of Gold Bullion to be delivered into or out of the Fund on a daily basisto reflect price movements in the Reference Currencies against the USD, calculated pursuant to the GoldDelivery Agreement.
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“Gold Delivery Provider” — Merrill Lynch International, a private unlimited company incorporated in Englandand Wales, which is a wholly-owned indirect subsidiary of Bank of America Corporation, a regulatedUnited States entity. Merrill Lynch International is regulated by the FCA and the Prudential RegulationAuthority.
“Gold Price” — Generally the LBMA Gold Price AM.
“Index” — The Solactive GLD® Long USD Gold Index, a transparent, rules-based index published by the IndexProvider and licensed to the Sponsor for use by the Fund, pursuant to the Index License Agreement.
“Index Business Day” — (i) any day that is a business day in New York and London, (ii) any day (other than aSaturday or Sunday) on which the LBMA is scheduled to publish the LBMA Gold Price AM, and (iii) any day(other than a Saturday or Sunday) on which WM Company is scheduled to publish prices for each of theReference Currency pairs comprising the FX Basket.
“Index License Agreement” — The agreement dated January 5, 2017 between the Sponsor and the IndexProvider, pursuant to which the Index Provider licensed to the Sponsor an exclusive right to use the Index andassociated marks in connection with the Fund and in accordance with the terms of the Index License Agreement,maintains and disseminates the Index, and serves as calculation agent for the Index.
“Index Provider” — Solactive AG.
“Indirect Participants” — Those banks, brokers, dealers, trust companies and others who maintain, either directlyor indirectly, a custodial relationship with a DTC Participant.
“LBMA” — The London Bullion Market Association. The LBMA is the trade association that acts as thecoordinator for activities conducted on behalf of its members and other participants in the London bullionmarket. In addition to coordinating market activities, the LBMA acts as the principal point of contact between themarket and its regulators. A primary function of the LBMA is its involvement in the promotion of refiningstandards by maintenance of the “London Good Delivery Lists,” which are the lists of LBMA accredited meltersand assayers of gold. Further, the LBMA coordinates market clearing and vaulting, promotes good tradingpractices and develops standard documentation. The major participating members of the LBMA are regulated bythe FSA in the United Kingdom under the FS Act.
“LBMA Gold Price” — The price per troy ounce of Gold Bullion for delivery in London through a member ofthe LBMA stated in USDs and set via an electronic auction process run twice daily at 10:30 a.m. and 3:00 p.m.London time each Business Day as calculated and administered by the ICE Benchmark Administration Limited(“IBA”), an independent specialist benchmark administrator who provides the price platform, methodology andoverall administration and governance for the LBMA Gold Price.
“LBMA Gold Price AM” — The 10:30 a.m. London time LBMA Gold Price.
“Listing Exchange” — The NYSE Arca or other primary U.S. national securities exchange on which Shares arelisted.
“London Good Delivery Bar” — A bar of Gold Bullion meeting the London Good Delivery Standards.
“London Good Delivery Standards” — The specifications for weight, dimensions, fineness (or purity),identifying marks and appearance of gold bars as set forth in “The Good Delivery Rules for Gold and SilverBars” published by the LBMA. The London Good Delivery Standards are described in “The Gold Industry —The London Bullion Market.”
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“London AM Fix” — The morning gold fixing price per troy ounce of gold for delivery in London through amember of the LBMA authorized to effect such delivery, stated in USDs. The London AM Fix was discontinuedas of March 20, 2015 and is no longer calculated. The London AM Fix was replaced by the LBMA Gold PriceAM.
“Market Disruption Event” — Disruptions in the trading of gold or the Reference Currencies, delays ordisruptions in the publication of the LBMA Gold Price or the Reference Currency prices, and unusual market orother events that are tied to either the trading of gold or the Reference Currencies or otherwise have a significantimpact on the trading of gold or the Reference Currencies.
“Marketing Agent Agreement” — The agreement between the Sponsor and the Marketing Agent under which,among other things, the Marketing Agent will assist the Sponsor with certain marketing activities.
“Marketing Agent” — State Street Global Advisors Funds Distributors, LLC, a Delaware limited liabilitycompany and a wholly-owned subsidiary of State Street Corporation.
“NAV” — The net asset value of the Fund or a Share of the Fund. See “Prospectus Summary — The Offering —Net Asset Value” for a description of how the NAV of the Fund and the NAV per Share are calculated.
“NFA” — National Futures Association, the self-regulatory organization for the U.S. derivatives industry.
“OTC” — The global Over-the-Counter market for the trading of gold which consists of transactions in spot,forwards, options and other derivatives.
“Participant Agreement” — An agreement entered into by each Authorized Participant with respect to the Fundwhich provides the procedures for the creation and redemption of Creation Units and for the delivery of the GoldBullion required for such creations and redemptions.
“Participant Unallocated Bullion Account Agreement” — The agreement between an Authorized Participant andthe Custodian which establishes the Authorized Participant Unallocated Account.
“Reference Currency” — A non-U.S. currency comprising part of the FX Basket with the weighting specified inthe Index that is valued with respect to the U.S. dollar. The Reference Currencies are the: euro, Japanese yen,British pound sterling, Canadian dollar, Swedish krona and Swiss franc.
“SEC” — The U.S. Securities and Exchange Commission.
“Securities Act” — The Securities Act of 1933, as amended.
“Shareholders” — Owners of beneficial interests in the Shares.
“Shares” — Units of fractional undivided beneficial interest in and ownership of the Fund which are issued bythe Trust.
“Sponsor” — WGC USA Asset Management Company, LLC, a Delaware limited liability company wholly-owned by WGC (US) Holdings, Inc.
“Sponsor Agreement” — The agreement between the Trust and the Sponsor setting forth, among other things, theSponsor’s compensation for its services as Sponsor of the Trust.
“Spot Next Forward Point” — The price difference between a spot transaction and spot-next trade, which islinearly interpolated based on the WM/Reuters “SW – Spot Week (One Week)” forward rates and a spottransaction.
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“Spot Rate” — The rate at which a Reference Currency can be exchanged for USDs on an immediate basis,subject to the applicable settlement cycle.
“tonne” — One metric tonne which is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
“Transfer Agent” — BNYM.
“Trust” — The World Gold Trust, a statutory trust formed on August 27, 2014 under Delaware statutory law asset forth in the Declaration of Trust.
“Trustee” — Delaware Trust Company, a Delaware trust company.
“Unallocated Bullion Account Agreement” — The agreement between the Trust and the Custodian whichestablishes the Fund Unallocated Account. The Allocated Bullion Account Agreement and the UnallocatedBullion Account Agreement are sometimes referred to together as the “Custody Agreements.”
“U.S. Shareholder” — A Shareholder that is (1) an individual who is treated as a citizen or resident of the UnitedStates for U.S. federal income tax purposes; (2) a business entity treated as a corporation for U.S. federal incometax purposes that is created or organized in or under the laws of the United States or any political subdivisionthereof; (3) an estate, the income of which is includible in gross income for U.S. federal income tax purposesregardless of its source; or (4) a trust, if a court within the United States is able to exercise primary supervisionover the administration of the trust and one or more U.S. persons have the authority to control all substantialdecisions of the trust.
“WGCUS” — WGC (US) Holdings, Inc., corporation registered under Delaware law and the sole member of theSponsor.
“Weekday” — each calendar day other than a Saturday or Sunday.
“WM” — The World Markets Company plc, which provides an exchange rate service that publishes Spot Ratesat fixed times throughout the global trading day.
“WMR Fix” — the World Markets Company plc foreign exchange benchmark rate.
“WMR FX Fixing Time” — the World Markets Company plc foreign exchange fixing time, which is generally9:00 AM London Time.
“WGC AM” — WGC USA Asset Management Company, LLC, a Delaware limited liability company wholly-owned by WGCUS. WGC AM is the Sponsor of the Trust and the CPO of the Fund.
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PART TWO
STATEMENT OF ADDITIONAL INFORMATION
SPDR® Long Dollar Gold Trusta series of
WORLD GOLD TRUSTSPONSORED BY WGC USA ASSET MANAGEMENT COMPANY, LLC
5,000,000 Shares of Beneficial Interest
The Shares are speculative securities that involve the risk of loss.Past performance is not necessarily indicative of future results.
See “Risk Factors” beginning at page 15 in Part One.
THIS PROSPECTUS IS IN TWO PARTS: A DISCLOSURE DOCUMENTAND A STATEMENT OF ADDITIONAL INFORMATION. THESE
PARTS ARE BOUND TOGETHER, AND BOTH CONTAINIMPORTANT INFORMATION. YOU MUST READ THE
STATEMENT OF ADDITIONAL INFORMATIONIN CONJUNCTION WITH THE
The SPDR® Long Dollar Gold Trust (the “Fund”), a single series of the World Gold Trust (the “Trust”), andWGC USA Asset Management Company, LLC, the Sponsor of the Trust (the “Sponsor”), may collect or haveaccess to certain nonpublic personal information about current and former investors. Nonpublic personalinformation may include information received from investors, such as an investor’s name, social security numberand address, as well as information received from brokerage firms about investor holdings and transactions inshares of the Fund.
The Fund, the Trust and the Sponsor do not disclose nonpublic personal information except as required by law oras described in their Privacy Policy. In general, the Fund, the Trust and the Sponsor restrict access to thenonpublic personal information they collect about investors to those of their and their affiliates’ employees andservice providers who need access to such information to provide products and services to investors.
The Fund, the Trust and the Sponsor maintain safeguards that comply with federal law to protect investors’nonpublic personal information. These safeguards are reasonably designed to (1) ensure the security andconfidentiality of investors’ records and information, (2) protect against any anticipated threats or hazards to thesecurity or integrity of investors’ records and information, and (3) protect against unauthorized access to or useof investors’ records or information that could result in substantial harm or inconvenience to any investor.Third-party service providers with whom the Fund, the Trust and the Sponsor share nonpublic personalinformation about investors must agree to follow appropriate standards of security and confidentiality, whichincludes safeguarding such nonpublic personal information physically, electronically and procedurally.
A copy of the Fund’s, the Trust’s and the Sponsor’s current Privacy Policy is provided to investors annually andis also available upon request.
TWO-1
EXHIBIT A
PRIVACY NOTICE
The importance of protecting an investor’s privacy is recognized by the SPDR® Long Dollar Gold Trust (the“Fund”), a series of the World Gold Trust (the “Trust”), and WGC USA Asset Management Company, LLC, theSponsor of the Trust (the “Sponsor”). The Trust, the Fund and the Sponsor protect personal information theycollect about you by maintaining physical, electronic and procedural safeguards to maintain the confidentialityand security of such information.
Categories Of Information Collected. In the normal course of business, the Trust, the Fund and the Sponsormay collect the following types of information concerning investors in the Fund who are natural persons:
Information provided through the Fund’s website, (including name, address, social security number, incomeand other financial-related information); and
Data about investor transactions (such as the types of investments the investors have made).
How the Collected Information is Used. Any and all nonpublic personal information received by the Trust,the Fund or the Sponsor with respect to the investors who are natural persons, will not be shared withnonaffiliated third parties which are not service providers to the Trust, the Fund or the Sponsor without priornotice to such investors. Such service providers include but are not limited to the Administrators, Transfer Agent,auditors and the legal advisers of the Trust, the Fund and the Sponsor. Additionally, the Trust, the Fund and/orthe Sponsor may disclose such nonpublic personal information as required by applicable laws, statutes, rules andregulations of any government, governmental agency or self-regulatory organization or a court order.
For questions about the privacy policy, please contact the Sponsor
